Cincinnati Bell announced on Friday that it has struck a $2.9 billion deal to be acquired by Macquarie Infrastructure Partners (MIP). Near the end of December, Toronto-based conglomerate Brookfield Infrastructure Partners LP announced it was buying Cincinnati Bell for $2.6 billion, but ultimately was out-bid by MIP.
Earlier this month, a bidding war between Brookfield and MIP broke out as Brookfield upped its bid to $13.50 per share on March 4 and then $14.50 in cash on March 5. On March 6, Cincinnati Bell said it has notified Brookfield that it intended to end their merger deal in order to enter into a "superior company proposal from MIP.
Under the terms of Cincinnati Bell's agreement with Brookfield, Brookfield had until 11:59 p.m. ET on March 12 to renegotiate its merger agreement with Cincinnati Bell so that MIP's proposal would no longer be a superior proposal, but Brookfield chose to walk away.
After terminating their December agreement, Cincinnati Bell has paid Brookfield a $24.8 million break-up fee.
"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, in a statement. "Importantly, the new transaction price of $15.50 per share represents a 7% increase from our previous merger agreement with Brookfield at $14.50 per share and a 101% 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 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, which made it an attractive target for suitors such as Brookfield and MIP.
Cincinnati Bell 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.
While AT&T, Verizon and CenturyLink have nationwide fiber footprints, there's still plenty of demand for fiber-based services and applications in secondary or regional markets. In addition to serving the Midwest, Cincinnati Bell has a large fiber presence in Hawaii after buying Hawaiian Telcom two years ago for about $650 million.
"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 MIP Chief Executive Officer Karl Kuchel, in a statement . "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."
Earlier this year, Cleveland-based Everstream announced it planned to spend $250 million in 2020 to meet its previously-stated goal of adding 15,000 miles route miles of fiber to its network.
After it passes the customary closing conditions, the deal between Cincinnati Bell and MIP is expected to close in the first half of next year.