Picture: ISTOCK
Picture: ISTOCK

New York — US  communications infrastructure provider Zayo Group Holdings  said on Wednesday it had agreed to be taken private by investment firms Digital Colony Partners  and EQT for about $8.2bn in cash.

The deal value of $35 per share is at a premium of 14.3% to Zayo's closing price on Tuesday. Shares of Zayo were up 8% at $33.13.

The deal is valued at more than $14bn, including Zayo's $5.9bn debt.

Zayo operates a 209,214km fiber network in the US and Europe to connect data centres and serves wireless and landline phone companies.

Bandwidth boom

It stands to benefit from rising demand for bandwidth in their markets, driven by cloud computing and streaming. The company, which went public in 2014, has been under pressure from activist hedge funds such as Starboard Value, which in March urged Zayo to consider a sale after taking a 4% stake in the company.

Boulder, Colorado-based Zayo said in November it would break itself up into two companies. However, in February, the company said it was not in its best interest to pursue a public spinoff as part of its strategic review.

The company had earlier rejected acquisition offers, including from a private equity consortium comprising Blackstone Group, Stonepeak Infrastructure Partners, KKR & Co, I Squared Capital, Charlesbank Capital Partners and GTCR.

"I am confident this partnership with EQT and Digital Colony will empower Zayo to accelerate its growth and strengthen its industry leadership," Zayo's CEO Dan Caruso said in a statement. The deal, which is subject to regulatory clearance and an approval from Zayo shareholders, is expected to close in the first half of 2020.

Goldman Sachs and JP Morgan are serving as financial advisers to Zayo Group and Skadden Arps is serving as legal counsel. Morgan Stanley and Deutsche Bank are acting as financial advisers to Digital Colony and EQT Infrastructure, and Simpson Thacher is serving as legal adviser.