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Fiber network operator Zayo to be taken private in $14-billion deal

Network infrastructure provider Zayo Group Holdings (NYSE: ZAYO) Wednesday said it has agreed to be taken private. The company entered into an agreement with EQT Partners and Digital Colony Partners, under which the investment firms will acquire it for $14.3 billion. The price values the company’s stock at $8.2 billion as on March 31. As per the terms of the deal, the purchase consideration will be paid in cash and debt – $35 per share and $5.9 billion respectively.

The Boulder, Colorado-based company, whose core business involves the development of communication infrastructure, has been facing stiff competition in the fiber network market. Also, the management was under pressure from activist investors who demanded fundamental changes to the organizational structure. A couple of months ago, the company said it was exploring strategic alternatives, apparently referring to the plan to go private.

As per the terms of the deal, the purchase consideration will be paid $35 per share in cash and $5.9 billion in debt

Post-buyout, the company will remain headquartered in the current location and continue to execute its strategy. The completion of the transaction is tentatively set for the first half of the calendar year 2020. While the deal has been approved by Zayo’s board of directors, it needs to obtain regulatory approvals and the consent of the company’s shareholders.

Also see: Zayo Group Holdings Q2 2019 Earnings Conference Call Transcript

“Digital Colony and EQT share our vision that Zayo’s Fiber Fuels Global Innovation. Both are experienced global investors in the communications infrastructure space, and they appreciate our extraordinary fiber infrastructure assets, our highly talented team and our strong customer base,” said Dan Caruso, chief executive officer of Zayo.

The ongoing recovery of Zayo shares, after hitting an all-time low in December last year, got a significant boost after Wednesday’s announcement. The stock, which gained 45% so far this year, traded up 8% during the early hours of the session.

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