- Uniti Group (UWL) will acquire fellow ASX-lister, OptiComm (OPC) for a total scheme consideration of $532 million
- The acquisition includes a $407 million cash consideration and a scrip consideration of 84 million Uniti shares — implying a $125 million value
- The company says the acquisition may eventually make it eligible for ASX 200 index inclusion
- Uniti will fund the cash component of the acquisition through a $270 million fully underwritten non-renounceable entitlement offer and a $150 million debt facility
- The acquisition supports Uniti’s vision of owning fibre infrastructure
- Additionally, Uniti has upgraded its second-half financial year earnings before interest, tax, depreciation and amortisation (EBITDA) to between $37 and $39 million with an annualised exit run-rate of between $40.5 and $41.5 million
- Uniti Group’s shares traded for $1.54 each today before going into a trading halt. OptiComm’s shares are up 4.58 per cent and trading for $5.25 each
Uniti Group (UWL) has entered a scheme implementation deed with ASX-listed OptiComm (OPC) under which Uniti will acquire 100 per cent of OptiComm’s shares.
The acquisition includes a cash consideration of $407 million and a scrip consideration of 84 million Uniti shares, which implies a $125 million value for a total consideration of $532 million.
Uniti will fund the cash consideration through a $270 million fully underwritten accelerated non-renounceable entitlement offer and a three year $150 million debt facility.
“The acquisition of OptiComm and the associated entitlement offer accelerates our strategy in private fibre infrastructure ownership and delivers the next phase of growth for Uniti shareholders,” Chairman Graeme Barclay said.
Uniti is offering OptiComm’s shareholders the ability to choose to receive the scheme consideration in one of five alternatives. This is subject to a pro-rata scale back if either the elected cash or scrip consideration exceed the above aggregate limits
Each OptiComm shareholder will also receive a 10 cent per OptiComm share fully-franked special dividend subject to OptiComm director approval.
OptiComm’s directors have already recommended that shareholders vote in favour of the scheme.
“Shareholders are expected to benefit from significant value creation from this transformational transaction and from the combined scale and capabilities of a more diverse telecommunications infrastructure company with a large pipeline of long-term growth opportunities,” Graeme added.
The acquisition is set to accelerate Uniti’s strategy in private infrastructure. This includes the complementary core greenfield FTTP (fibre to the premises) network and entry into retirement living, community and commercial areas.
The acquisition will also support a high level of future organic earnings growth supported by an existing contracted pipeline in excess of 150,000 lots held by OptiComm, as well as more than 70,500 active premises.
Importantly, this buy is set to make Uniti a larger, more profitable and diversified business, with a market cap expected to be eligible for inclusion in the S&P/ASX 200 index.
“OptiComm is highly complementary to Uniti’s existing fibre infrastructure business, providing an embedded pipeline of funded organic growth, increased fibre network build capability and a successful, skilled workforce to enhance our proposition to existing and prospective customers,” Uniti Managing Director and CEO Michael Simmons said.
FY20 earnings guidance upgrade
The company’s previous earnings guidance for the second half of FY20 was an earnings before interest, tax, depreciation and amortisation (EBITDA) of between $17.5 and $18.5 million (or $35 to $37 million on an annualised basis) and an annualised exit run-rate EBITDA of between $38 and $40 million.
However, due to the company not making any acquisitions and focusing on organic profit growth, the revised EBITDA for the second half of FY20 may be in the range of $18.5 and $19.5 million ($37 and $39 million on an annualised basis) and an annualised run-rate EBITDA of between $40.5 and $41.5 million as of this month.
The $41 million represents a 24 per cent increase over this year, compared to the December 2019 annualised exit run-rate EBITDA guidance of $33 million.
“Our earnings growth in H2 FY20 and increased guidance without an acquisition being completed in H2 is evidence of our ability to integrate acquisitions to achieve efficiencies and growth,” Michael added.
Shortly after today’s announcement, Uniti Group went into a trading halt and shares last traded for $1.54 each at 11:15 AEST.
OptiComm’s shares are up 4.58 per cent and trading for $5.25 each at 12:06 pm AEST.