Macquarie to pay $2.9bn for Cincinnati Bell

June 2020 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

June 2020 Issue

Regional telecoms provider Cincinnati Bell has agreed to be acquired by Macquarie Infrastructure Partners (MIP) for $2.9bn.

Cincinnati Bell had been the subject of a bidding war which began in December 2019 when Brookfield Infrastructure Partners agreed in principal to acquire the company for $2.745bn, before MIP made a counteroffer for the telecoms provider.

Eventually, Brookfield upped its bid to $13.50 per share on 4 March and then $14.50 in cash on 5 March. However, MIP offered $15.50 per share for the company and agreed to assume its existing debt.

Brookfield was given a deadline of 12 March to make necessary changes to its existing bid, but the Toronto-based conglomerate declined to match MIP’s sweetened cash offer, saying in a statement that it “will not exercise its right to propose any further revisions to its previously announced merger agreement and will let its negotiation period lapse”.

After terminating its December agreement, Cincinnati Bell has paid Brookfield a $24.8m break-up fee.

MIP’s acquisition of Cincinnati Bell is expected to close in the first half of 2021, subject to certain regulatory and shareholder approvals.

“After carefully evaluating MIP’s revised offer, we are confident that this transaction is in the best interest of Cincinnati Bell and its shareholders,” said Lynn A. Wentworth, chairman of the Cincinnati Bell board of directors. “Importantly, the new transaction price of $15.50 per share represents a 7 percent increase from our previous merger agreement with Brookfield at $14.50 per share and a 101 percent premium to Cincinnati Bell’s closing per share price of $7.72 on December 20, 2019, the last trading day prior to the date when the original merger agreement with Brookfield was entered into. This underscores the robust and disciplined process that we executed to ensure immediate and maximum value creation for our shareholders.”

Cincinnati Bell is a regional provider of technology and entertainment services, including home and business internet, television and voice services. The company is expanding its network to next-generation fibre, which will fuel the growth of 5G mobile technology. Its acquisition by a larger company will accelerate that process and provide flexible data, video and IP solutions with better network coverage and broadband speed to customers across a number of regions.

“This transaction with MIP represents an exciting opportunity to enhance our financial position and expand our resources to better serve our customers,” said Leigh Fox, president and chief executive of Cincinnati Bell. “MIP exhibits deep telecommunications expertise and a strong track record of investing in capital intensive businesses, which will be critical as we deliver on our strategy to drive next generation, integrated communications through an expanded fiber network as well as our IT services platform. We firmly believe this transaction will allow us to enhance our services and drive long-term value for our customers in Hawaii, Ohio, Kentucky, and Indiana, and across North America.”

“Given the significant investment that the Company has made into its fiber network, Cincinnati Bell represents a truly differentiated platform compared to other network providers," said Karl Kuchel, chief executive of MIP. “We are pleased to partner with the experienced management team to continue to expand the fiber footprint and bring high bandwidth connectivity to homes and businesses in the Company’s service territories. The investment in Cincinnati Bell represents an exciting addition to our portfolio of fiber and communications infrastructure assets, both in the United States and globally.”

For MIP, the deal will build on its investments in telecommunications companies serving various regions of the US, including markets such as Hawaii, Ohio, Kentucky and Indiana. Around 75 percent of MIP’s assets are tied into infrastructure.

Richard Summerfield