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Macquarie beats Brookfield with last-minute $3bn offer for Cincinnati Bell

CincinnatiBell tram.jpg

Australian-owned Macquarie has overtaken Canadian-owned Brookfield with a last-minute dash to buy Cincinnati Bell.

The US telco said in December that Brookfield Infrastructure, based in Toronto, would buy the company for US$2.6 billion. Last week Cincinnati Bell pushed up Brookfield’s price first to $13.50 a share in cash and then to $14.50 – valuing the company at $2.85 billion – and the deal appeared set to go ahead.

But on Friday the company, which operates landline services in a 40km radius of Cincinnati’s city centre, including parts of Ohio, Kentucky and Indiana, said it had received a superior offer from part of Australia’s Macquarie, for $15.50 a share – valuing the company at $3.05 billion.

One of Cincinnati Bell’s attractions to both bidders is its fibre-to-the-home (FTTH) services, which connects 17,700 customers in Cincinnati – where it advertises on the local streetcars or trams (pictured) – and another 3,800 in Hawaii: Cincinnati Bell spent $650 million in 2018 to buy the parent company of Hawaiian Telcom from the Carlyle Group.

Cincinnati Bell, which has kept independent of the telecoms giants for 150 years, said that the $15.50-a-share offer from Macquarie Infrastructure and Real Assets (MIRA) was a “superior company proposal” as defined in the original deal with Brookfield.

Brookfield said on Friday 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”.

In other words, Brookfield has ceded victory to MIRA. “Cincinnati Bell will be able to, and intends to, terminate the Brookfield merger agreement and enter into a definitive agreement with MIRA,” said the telco, which had revenue of $1.5 billion in 2019 with operating income of only $73 million.

MIRA, a part of Macquarie Asset Management, says it has $83 billion of equity under management and $129 billion of assets under management – assets ranging from farmland to Thames Water, the London-area water and sewer company.

 

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