Cincinnati Bell agrees to Macquarie's $2.9B bid

The bidding war over Cincinnati Bell has come to an end.

Under a deal announced Friday, Macquarie Infrastructure Partners (MIP) will acquire all outstanding shares of Cincinnati Bell for $15.50 per share in cash, valued at roughly $2.9 billion, including debt. MIP is a fund managed by Macquarie Infrastructure and Real Assets (MIRA).

The final deal came together after the Cincinnati Bell board determined that the MIP proposal was superior to a previously announced deal with Brookfield Infrastructure for $14.50 per share, or about $2.84 billion, including debt. Brookfield alerted Cincinnati Bell on March 6 that it would not sweeten its offer. As a result of the terminated deal, Cincinnati Bell has paid Brookfield a $24.8 million break-up fee.

The final price on the MIP-led offer is a 101% premium to the closing per share price of $7.72 on December 20, 2019, the last trading day prior to the date when Cincinnati's original merger agreement with Brookfield Infrastructure was executed. It also represents a 7% premium to Brookfield's prior binding agreement to acquire Cincinnati Bell.

Cincinnati Bell and MIP expect to complete the deal in the first half of 2021.

Cincinnati Bell operates networks serving a mix of broadband, video and voice services in Cincinnati and Dayton, Ohio, and parts of Hawaii (through Hawaiian Telecom). The company is also pushing ahead on a fiber upgrade as part of an effort to support rising customer demands for traditional broadband services as well as new 5G offerings.

Cincinnati Bell pulled down revenues of $390 million in the fourth quarter of 2019, down 8.6% from revenues of $399 million in the year-ago quarter. The bulk of Q4 2019 revenue came from entertainment and communications ($246 million) and IT services and hardware ($150 million). The company ended 2019 with 484,800 homes connected to its FTTP network in greater Cincinnati, or about 60% of the city's total addressable market, and about 173,500 homes and businesses connected to its FTTP network in Hawaii, or about 35% of the state.

Why this matters
The final agreement ends a months-long bidding war for Cincinnati Bell, removing the uncertainty about who will be at the helm once the deal is wrapped up next year.

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. About 75% of MIP's assets are tied into infrastructure.

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— Jeff Baumgartner, Senior Editor, Light Reading

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