Zayo Group has reportedly announced that it will be splitting into two publicly traded firms: the first one being focused on providing core communications infrastructure and the other leveraging infrastructure to provide solutions for various enterprise customers.
Apparently, InfraCo would be a distinctive infrastructure provider, focused on fiber and having dense, deep networks and wide geographic reach throughout Western Europe and North America. EnterpriseCo would supposedly consist of customer base and strong portfolio of product centered on higher bandwidth connectivity to enterprises, including SaaS providers and public cloud, which would be sold both wholesale and directly to enterprise customers through a carrier focused channel.
Chairman and CEO of Zayo, Dan Caruso, mentioned that in the evolution of Zayo, this is the logical next step and that achieving the company’s growth objectives is getting difficult with the complexities of the businesses grouped in five autonomous segments.
Caruso said that the company would enable more focused execution in every business, by dividing the enterprise and infrastructure businesses completely, which would lead to enhanced growth and unlocking value. The company expects the transition to be reasonably straightforward, as it operates independent businesses today.
This transaction is anticipated to concluded through a pro rata taxable spin of EnterpriseCo from the group. The existing NOLs of the group are predicted to be available for lowering any cash taxes due to be paid by Zayo in conjunction with the split-off.
This structure seemingly secures the ability for InfraCo to be converted into a real estate investment trust (REIT). The conclusion of the spin is subjected to the Board and regulatory approval. Zayo shareholders would own shares in both the companies just after the separation transaction, which is predicted to be concluded in late 2019.
EnterpriseCo would be led by SVP of Zayo’s existing Enterprise Segment, Tyler Coates, and current president of Zayo’s Allstream Segment, Mike Strople. J.P. Morgan and Goldman Sachs are serving as financial advisors to the group.
