An Oct. 20 story in the Wall Street Journal said that a group including Zayo Group is trying to buy broadband network owner Uniti Group and its principal customer, Windstream Holdings II. The Journal cites people familiar with the matter as its source.
According to the Journal, the parties involved had discussed a price of about $15 per share, which would value Uniti Group at about $3.5 billion. The talks came to a standstill over the price, according to the Journal. In making a presentation of its earnings report for the second quarter, the company said its implied share price ought to be between $20 and $30.
The price of Uniti Group shares rose 7.43 percent just before the stock market session ended on Wednesday, and the price closed at $13.01. Year-to-date, Uniti Group shares have risen by 11.58 percent, falling as low as $10.37 on June 18.
Zayo Group was a public company until 2020, when Digital Colony and EQT, as lead investors, acquired the company for $35 per share in a cash transaction valued at $14.3 billion, according to Zayo. Digital Colony later took the name DigitalBridge Group, as did Colony Capital, bringing Digital Colony and Colony Capital under the one name.
The Journal said it did not learn the terms of the transaction and said the purchase prices for the two companies would most likely be high, because Uniti Group has about $5 billion of debt, and Windstream has about $2 billion of debt.
Windstream, a telecom services provider, once was a part of Uniti Group. Windstream’s fiber-optic network became the largest Uniti Group asset when Uniti Group separated from Windstream, and Windstream entered a long-term lease for the continuing use of the fiber-optic network. Although Uniti Group has added to its customer base since the separation, Windstream still accounts for about 70 percent of Uniti Group’s revenue.