That’s what the WSJ said yesterday. Supposedly the talks for such a deal started back in June, but that the parties have been unable to agree on a price tag — which you may have notice is usually a point of contention when making deals. But does this move make really make sense?
I suppose it depends on what the deal actually looks like. The idea of Zayo being interested in hybrid ILEC/CLEC assets would be surprising to me. However, if Zayo were taking on the underlying infrastructure business one might get by buying Uniti and, say, Windstream Wholesale, then sure that might make a lot of sense for them. So the question is what would happen to the rest of Windstream in this hypothetical scenario.
Windstream emerged from BK last year, a period in which Uniti was under a cloud due to the successful Aurelius lawsuit over its spinoff from Windstream years ago. Since then the companies have moved to regularize things, investing in their assets and product sets. With the Aurelius business behind them both and a bit of operational visibility, some inorganic activity certainly would get easier to contemplate for outside parties.
Zayo’s owners at Digital Bridge and EQT would of course be at the core of the ‘others’, and Elliott Management’s ownership of Windstream and part of Uniti certainly puts them on the other side of the table. But unless Digital Bridge and EQT are looking to isolate the FTTH opportunity within Windstream as is, it seems to me like there must be another big player in here somewhere — maybe a strategic one. Or if there isn’t, maybe there could be.
That being said, the deal only works for the money guys if it’s cheap enough. And it’s unclear if Elliott’s price is within the necessary budget. I kind of doubt this one will happen soon, but rather than fail the effort could simmer for a while first before it’s ready.
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