Zayo, the largest independent fiber operator in North America, reportedly targeted for takeover

Zayo
Zayo is a major player in the market for fiber. (Zayo)

The biggest independent owner of fiber in North America, Zayo Group, is attracting suitors and takeover interest from private equity funds and investment firms, according to a Bloomberg report. News of the deal, which would take Zayo private, sent stock prices soaring as much as 20% in early trading.

Zayo, which operates a fiber network across North America and Europe that stretches almost 130,000 miles, announced plans earlier this month to split the company into two separate entities. Those plans paired with underperforming financial results and the advancement of 5G likely stoked interest in the company among investors who want to seize on an opportunity. Zayo’s stock price slid more than 25% earlier this month after it reported lower-than-expected results from the previous quarter. Prior to the takeover report, Zayo’s shares were down 36% for the year.

Investor interest in fiber is a smart play, regardless of that fluctuation in stock value. Fiber is one of the, if not the most, critical components of a 5G network, according to a research note from Wells Fargo Securities.

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Indeed, fiber broadband this year become the second most popular type of home-based internet, just behind cable, according to consumer research conducted by RVA and funded by the Fiber Broadband Association. Fiber broadband surpassed 35 million homes in the U.S. as annual fiber deployment also hit a new record last year, according to RVA.

Zayo, which went public in 2014, has attracted takeover interest from Blackstone Group LP, Stonepeak Partners LP, KKR & Co., I Squared Capital, GTCR and Charlesbank Capital Partners, according to Bloomberg.

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