Zayo: Two or three rounds of bid speculation have surrounded US communications infrastructure group in the recent past. A low ball offer just above $30 has been understandably rejected by the company – especially so given the way the average analyst target at $35 and most accompanied by strong buy recommendations. In addition, activist shareholder Sachem Head Capital would not be willing to sell out cheaply.
The bidders are however regrouping, even though private equity likes and needs to buy cheap, in this situation, with Google / Alphabet a potential bidder this is not likely to be possible. Blackrock – said to be in the fray, will have to dig deeper into its pockets. But at least it has the funding lined up and is revising its offer to around $35. Google would likely pay more if it had to.
The suggestion is therefore that the aforementioned $35 is likely to be the new offer for Zayo to contend with. In a competitive bid situation up to $40 could materialise, especially given the way that the company’s recent trading has been so solid.
Barring an overnight / sudden announcement (as soon as this weekend), a break of $28 – recent chart resistance would imply that this situation is once again strongly in play.
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