Cincinnati Bell Picks Macquarie Amid Intense Bidding War

Amid an intense bidding war between two investment firms that sent the coffers ringing with bids and counter-bids, Cincinnati Bell Inc. CBB has acknowledged a higher acquisition offer from Macquarie Infrastructure and Real Assets Inc. (“MIRA”) and refuted its original suitor — Brookfield Infrastructure Partners L.P. BIP. Per media reports, the latest increment of $15.50 cash offer is believed to be the final proposal, thereby making MIRA its new owner.

Per the revised terms, Cincinnati Bell’s shareholders will be entitled to receive $15.50 in cash for each outstanding share, thereby striking a cumulative valuation of nearly $2.8 billion, including debt. Markedly, this amended transaction price represents approximately twice the initial closing price of $7.72 on Dec 20. Interestingly, the revised merger agreement was followed by Cincinnati Bell’s non-binding proposal to get acquired by Brookfield for a cash consideration of $14.50 per outstanding share. It is apparently believed that the latest bidding price was the highest Brookfield was willing to offer and it was unwilling to increase its bid price any further.

Notably, the regional provider of communications services stated that MIRA’s up-to-the-minute offer constitutes all the essential factors of a “Superior Company Proposal”, which makes it all the more evident that Cincinnati Bell might terminate the merger contract with Brookfield to enter into a definitive agreement with it. As of now, Cincinnati Bell has notified that Brookfield will be able to exercise its rights to make necessary changes to the existing bidding price of $15.50 per share till Mar 12, failing which the contract will ultimately go in favor of MIRA.

The deal, which is expected to close by the end of 2020, is primarily aimed at reinforcing Cincinnati Bell’s augmented fiber network and 5G mobile technology. Markedly, it is anticipated to enhance the overall financial health of this data and voice communications services provider, by delivering state-of-the-art integrated communications infrastructure to nearly 1.3 million customers through its upgraded fiber network.

This will further help the company deliver flexible data, video, voice and IP solutions with enhanced network coverage and broadband speed to customers primarily based in Ohio, Indiana, Kentucky and Hawaii. The transaction is likely to maximize the value of all stakeholders in the long run with a positive cash flow, reflecting brighter prospects for the company in the days to come.

Notably, Cincinnati Bell’s efforts to evolve from a legacy copper-based telecommunications company to an IT company with contemporary fiber assets, offering seamless network solutions to both consumer and business customers, are remarkable. The company’s move to monetize investments, enhance shareholder returns and prioritize customer satisfaction augurs well for the region’s economic development.

Driven by diligent execution of its operations, the stock has rallied 66.1% against the industry’s decline of 37.7% in the past year.

Zacks Rank & Stocks to Consider

Cincinnati Bell currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry are Just Energy Group Inc. JE and Duke Energy Corporation DUK. While Just Energy sports a Zacks Rank #1 (Strong Buy), Duke Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Just Energy exceeded estimates twice in the trailing four quarters, the positive earnings surprise being 62.6%, on average.

Duke Energy exceeded estimates in the trailing four quarters, the positive earnings surprise being 6.5%, on average.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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