Zayo Group reportedly wants to acquire both Uniti and Windstream, and has been pursuing a deal since June.

The Wall Street Journal broke the news, citing people familiar with the matter.  The talks with Uniti started in June, it said. That’s when the parties discussed a price of around $15 a share, or $3.5 billion. However, talks reportedly stalled recently over price.

In a presentation accompanying its second-quarter earnings call in August, Uniti said it believes the stock, which was up nearly 11% Thursday on the news, should trade at closer to $20-$30 a share.

Windstream is owned by Elliott Management of New York and other former creditors. The business communications giant emerged from Chapter 11 bankruptcy in September 2020.

Uniti spun off from Windstream in 2015 and owns the broadband infrastructure that Windstream leases from the company.

According to the Wall Street Journal, a Zayo acquisition would bring the separate companies back together.

Neither Zayo nor Uniti responded to requests for comment.

Windstream Speaks Out

Tony Thomas, Windstream’s president and CEO, sent us the following statement:

Windstream’s Tony Thomas

“Windstream is aware of the article published in the Wall Street Journal, but does not have further comments regarding any potential transactions. Without commenting on any specific transaction, any plan that would allow us to enhance and accelerate our fiber build economically would be a positive for Windstream and its customers across rural America.”

Brian Washburn is an analyst with Omdia. He said Zayo pursuing Uniti and Windstream is “a little surprising, but not very.”

Omdia’s Brian Washburn

“On the surface, Zayo’s growth came from infrastructure acquisitions and Uniti holds infrastructure,” he said. “Whether or not the two companies have been in talks, a hypothetical conversation certainly would make sense.”

If Windstream also were in these conversations, knowing Zayo’s history of being interested in certain assets, Zayo would hope to acquire key fiber-based holdings from each company, Washburn said.

“For example, Zayo historically does not operate residential and small business access networks and services as part of its core business,” he said. “If there were a multi-way conversation, the elements and possible scenarios could quickly grow to be quite complex.”