Cincinnati Bell may back out of its merger deal with Brookfield Infrastructure after announcing on Friday that it has received a "superior company proposal" from Macquarie Infrastructure and Real Assets. Inc. (MIRA). New York-based MIRA has offered $15.50 per share in cash for Cincinnati Bell.
Near the end of December, Toronto-based conglomerate Brookfield Infrastructure Partners LP announced it had struck a deal to buy Cincinnati Bell for $2.6 billion. Under the terms of the cash-and-debt deal, Cincinnati Bell shareholders would receive $10.50 in cash for each share of common stock, or 36% above the company's $7.72 closing price on December 20.
This week, Brookfield upped its bid to $13.50 per share on Wednesday and then $14.50 in cash on Thursday. Cincinnati Bell said on Friday that it has notified Brookfield that it intends to end their merger deal in order to enter into a new deal with MIRA.
Under the terms Cincinnati Bell's agreement with Brookfield, it has until 11:59 p.m. ET on March 12 to renegotiate its merger agreement with Cincinnati Bell so that MIRA's proposal would no longer be a superior proposal.
"Cincinnati Bell will negotiate in good faith with Brookfield during this period, and the Cincinnati Bell Board will consider in good faith any changes to the Brookfield merger agreement that Brookfield may propose during this period," Cincinnati Bell said in its Friday press release.
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Cincinnati Bell is an attractive target for both MIRA and Brookfield due to its fiber assets. Cincinnati Bell has been upgrading its network with next-generation fiber in order to support the growing demand for data and the broader rollout of 5G services. The company said it has "future-proofed" 50% of its network, representing more than 17,000 miles of dense metro and last-mile fiber and has plans to further upgrade its network over the next few years.
The ongoing fiber upgrade will enable the company to provide utility-like services for broadband and data, which it hopes will generate stable and growing cash flows.
With the advent of 5G, IoT and OTT video services, investors such as Brookfield and MIRA are snapping up network, data center and fiber-based assets in order to cash in on the increased demand for bandwidth capacity.
Cincinnati Bell, which was founded in 1873 as a telegraph company before becoming a Bell System franchisee, owns and operates a data transmission and distribution network in Cincinnati, Ohio and Hawaii, with a footprint of over 1.3 million homes.
Shares of Cincinnati Bell were up 3.3% in pre-market trading Friday morning. Through Thursday, Cincinnati Bell's stock has surged 112% over the past three months.