Private Equity Takes a Look at Zayo

Could Zayo’s days as a publicly traded company be numbered?  In the wake of the network infrastructure operator’s recent struggles meeting its growth targets and the resulting stock price drop, rumors are circling that a takeout offer could materialize relatively quickly.  Yesterday, Bloomberg put a few names and faces on that possibility.

Apparently, a group of big money investors is taking a strong interest in the idea.  Blackstone Group, Stonepeak Partners, KKR, I-Squared Capital, GTCR, and Charlesbank Capital are all mentioned as part of the group, although none of them are talking.    None of those companies would be new to such assets, and they clearly sense an opportunity.  The public markets have not been particularly good to players in this business, but private equity has made oodles of profit off of infrastructure over the past decade.

Along with its earnings report a few weeks ago, Zayo revealed plans to split the company in its infrastructure and enterprise components.  The former would probably be on the path to becoming a REIT, which has been a subject of much discussion over the last several years.  Such a split would be easier to do outside of the bright lights of the public markets, although of course any buyer might potentially have other ideas.

That being said, this is probably just the first such rumor – private equity is fast on its feet.  Remember in the past who was supposed to step up to the plate to buy Zayo one day?  Comcast is still out there, but I’m not sure I’d take Google off the table.  In fact, it occurs to me that Comcast might want the enterprise focused pieces more, and Google might want the infrastructure given how much of it they already use today.  Of course, where Google goes, so go the other hyperscale giants.  This could get interesting.

If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!

Categories: Fiber Networks · Mergers and Acquisitions