Multiple reports ranging from the NY Post to Reuters are saying that Zayo has turned down a bid for the company. The bidder is said to have been a consortium led by Blackstone Group, and the proposed purchase price was around or just above $30/share.
That would have been a premium to the current stock price of $25 and change per share. However, Zayo’s stock price was in the $35 range until the company’s results ran afoul of expectations last fall, and the company surely feels that its assets are worth a more substantial premium. Private equity firms have long been paying higher multiples than public markets for infrastructure assets, and when Zayo’s stock price fell to the mid to low 20s late last year it set off a speculation frenzy.
While Zayo has apparently spurned this offer, it remains fairly likely that there will eventually be a deal that does meet their fancy. I suspect that Zayo’s board and management team would rather be privately held right now given the lack of love the public markets have for assets with a longer term viewpoint. The activist hedge fund Sachem Head Capital Management also issued an open letter to the company to further explore a sale, indicating that if nothing else the pressure is not likely to dissipate any time soon.
Earlier speculation that a strategic buyer like CenturyLink, Google, or Comcast might step up with a bid has mostly cooled, although you never know. Such bidders would be slower off the mark than private equity. But perhaps more likely to pay what Zayo would accept is an infrastructure fund like Macquarie or EQT.
Others said to be in the bidding consortium are familiar names in the infrastructure space: Stonepeak, KKR, Charlesbank, GTCR, and I Squared Capital.
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