UK-based alternative fibre network provider, CityFibre has agreed the terms of a recommended cash acquisition by Bidco.
Newly incorporated company, Bidco – which is indirectly owned by a consortium including private equity house Antin and Goldman Sachs’ West Street Infrastructure Partners – is paying 81p per share for CityFibre in a deal worth £537.8 million.
The acquisition is due to be implemented with a court-sanctioned scheme of arrangement under Part 26 of the Companies Act. It must first be approved by a majority of scheme shareholders present and voting (and entitled to vote) at the scheme court meeting, either in person or by proxy, representing 75% in nominal value of the Scheme Shares held by those Scheme Shareholders.
Having taken advice from Rothschild, the directors of CityFibre consider the terms of the acquisition to be reasonable. Rothschild is said to have taken into account the commercial assessments of the directors, who intend to recommend unanimously that shareholders vote, or procure the voting, to approve the scheme at the meeting. The move comes as CityFibre seeks to increase funding for its building of fibre to the premises (FTTP) networks around the UK. It is currently working in partnership with Vodafone to bring fibre-to-the-premises (FTTP) infrastructure up to five million UK homes and businesses by 2025 (see Vodafone-CityFibre deal could shake up British broadband), with Milton Keynes announced earlier this year as the first community to benefit from gigabit-capable ‘full fibre’ broadband under the partnership (see Vodafone and CityFibre choose Milton Keynes for FTTP roll-out).
The acquisition is subject to conditions including the receipt of anti-trust clearances from the relevant authorities in China and the European Union (or the lapsing of the relevant waiting periods), each such clearance being on terms that are satisfactory to Bidco, WSIP and Antin. Further details of the scheme are to be set out in a scheme document which is expected to be sent to CityFibre shareholders around 11 May 2018.
Commenting on the agreement, Chris Stone, chairman of CityFibre, said that the board: ‘believes that this transaction represents compelling value for CityFibre’s existing shareholders and is also a good solution for CityFibre's long-term funding. Under private ownership, CityFibre will be able to gain alternative and potentially easier access to the financing required for its announced FTTH deployment. This will strengthen the Company’s ability to deliver on its vision to provide full fibre infrastructure to 20% of the UK market.’
Managing partner of Antin, Mark Crosbie added: ‘We are very excited to support the company in its next phase of development as it becomes a leading alternative fibre-based communications provider in UK cities. We have significant experience in investing and supporting infrastructure businesses in the telecom sector and we look forward to working with CityFibre's management team to realise the full potential of their vision.’
Concluded Philippe Camu, global head of WSIP: ‘CityFibre is an exciting and innovative communications infrastructure company and we strongly support its vision to expand fibre-based broadband networks across the UK.’