After stumbling a bit last year operationally, Zayo's valuation this winter has certainly made it attractive to such offers. A variety of private equity groups have already been named as possible bidders as well, but not much concrete has materialized. Google and CenturyLink would be strategic buyers with overlapping assets and synergies. The theory is that they could therefore offer more, and it is certainly a make-able case.
As big as Zayo has become relative to its origins, Google (or Alphabet, whatever) could buy it for pocket change if they thought owning that much infrastructure was the right way to go for the company. But it would be a big shift in strategy. Google's approach to infrastructure has been mostly from a distance with an eye toward promoting what they want to happen more broadly. Where they've gotten their hands greasy in operational terms (Google Fiber, for instance) they have often backed off.
Do I believe they have changed their mind and would like to roll trucks and dig trenches at the metro level on a global scale? No, I don't. Not completely anyway. But I could envision Google making an investment alongside others willing to ride herd on the company. In other words, I'm more inclined to believe in a buyout offer by 'Google and friends' than 'Google solo'.
As for CenturyLink, the Level 3 integration is well underway and operationally the company is probably ready for a deal of this size. But are they hungry for it? Of all the potential buyers, from an infrastructure standpoint CenturyLink has the fewest holes to fill. In fact, I'd have to wonder if regulators might balk at the sheer amount of infrastructure such a deal would put under one roof.
That being said, the synergies could be massive and the people on both sides obviously know their way around an integration by now, whether from Zayo, legacy CenturyLink, or Level 3. One can argue whether the combined company could make progress toward real growth better any better than the two independent ones could, but I'm not sure whether it's needed to make a deal work. The question is, do the folks at CenturyLink still see themselves as the premier network consolidators? If they do, then this is the end game, and they must play it.
On the other hand as public companies they have less flexibility when it comes to long term bets on assets. Private equity has fewer voices of protest to face. I'm still waiting for Crown Castle to show up in one of these merger rumors. And the voice we aren't hearing much from on the subject is Zayo itself, and I wonder how receptive they really are to any of this.