24th Apr 2018 10:34
LONDON (Alliance News) - CityFibre Infrastructure Holdings PLC said Tuesday it has agreed a GBP537.8 million all-cash takeover offer from a infrastructure investment consortium, as it also reported making strategic progress in 2017 despite profit falling on higher costs.
CityFibre agreed to a 81.0 pence per share offer from Connect Infrastructure Bidco Ltd. Connect is a newly-formed company jointly-owned by Antin Infrastructure Partners UK Ltd and West Street Global Infrastructure Partners III LP.
The offer price represents a 93% premium to the share price at the close on Monday.
Shares in CityFibre were 89% higher at 79.231p on Tuesday, giving it a market capitalisation of GBP501.3 million.
"CityFibre has established itself as a leading independent provider of wholesale fibre infrastructure in the UK and has been on a transformational journey since its IPO in 2014," CityFibre Chairman Chris Stone said. "Your 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."
CityFibre listed at 60p per share in January 2014, valuing it at the time at GBP31.4 million.
"Under private ownership," Stone added, "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."
The takeover news came the same day as CityFibre reported its 2017 results.
In 2017, CityFibre saw its pretax loss widen to GBP16.6 million from GBP12.6 million the year prior. This was despite revenue rising to GBP34.8 million from GBP15.4 million the year before.
Profit performance was hurt by a significant rise in cost of sales and administrative expenses. Cost of sales came in at GBP14.7 million in 2017 compared to GBP1.8 million in 2016. Administrative expenses rose to GBP27.8 million from GBP18.7 million the year prior.
Revenue performance was boosted by the addition of GBP15.4 million from its Entanet International Ltd acquisition in 2017. CityFibre bought Entanet for GBP29 million in cash in July 2017.
"I am delighted to report that CityFibre has made excellent strategic progress throughout 2017, a year in which we moved a step closer to realising our long-held vision of a full fibre future across the UK," CityFibre Chief Executive Officer Greg Mesch said. "We continued to make significant headway within the public sector market and we now are well-positioned to benefit from a more supportive public policy environment."
"We've strengthened our positioning in the business segment following the acquisition of Entanet, which brings a well-developed wholesale channel and service delivery platform that advances us several years in our evolution," Mesch added. "Entanet is placing increasing volumes of new business on-net with CityFibre each month."
Mesch continued: "We completed 2017 by signing a landmark FTTH [fibre-to-the-home] agreement with Vodafone, which is the most significant alternative communications infrastructure development in the UK in at least 30 years."
"CityFibre is now firing across all our key market verticals and our focus is firmly on programme delivery and continued commercialisation", Mesch concluded.