Tuesday, Macquarie Communications Infrastructure Group (MCG.AX, MQCIF.PK) or MCG, a communications infrastructure investment company, said institutional investor Canada Pension Plan Investment Board or CPPIB has made formal cash offers to acquire MCG stapled securities for A$2.50 per stapled security. The offer price values the equity of MCG at A$1.37 billion and implies an enterprise value at A$7.3 billion.
The Australian company consists of three entities, Macquarie Communications Infrastructure Limited, Macquarie Communications Infrastructure Trust, and Macquarie MCG International Limited that is managed by the Macquarie Communications Infrastructure Management Limited. The company owns 48% interests in Arqiva and National Grid Wireless, a 50% interest in Airwave and 100% interest in Broadcast Australia.
The enterprise value of CPPIB's offer amounts to A$2.50 per MCG stapled security plus proportionate asset net debt of A$5.342 billion, exchangeable bonds of A$570.8 million and corporate net debt of A$39.6 million. The offer price represents a 67% premium to the last closing price of MCG stapled securities, and a 134% premium to the three month average trading price.
CPPIB will acquire all the securities of MCG, except those held by Macquarie Communications Infrastructure Management Limited or MCIML, the responsible entity and manager of the MCG group, under three separate schemes of arrangement. Security holders will vote on the schemes at meetings to be held in June.
If the scheme is approved by MCG security holders, CPPIB will acquire MCIML by way of a separate inter-conditional offer together with MCIML's entire holding of 18.3% of MCG stapled securities for A$2.50 per stapled security.
The ancillary transaction provides for an upfront amount of A$56.5 million to be paid to Macquarie for the acquisition of MCIML and certain intellectual property and a payment of about A$4 million per annum for up to 10 years for ongoing advisory services in respect of Arqiva and Airwave and transitional services.
CPPIB intends to fund the cash offer of A$2.50 per stapled security, and other commitments associated with the offer, from its existing cash resources. There is a break fee of about A$13.66 million, representing 1% of the equity value of MCG implied by the offer, payable by MCG to CPPIB in certain circumstances.
The Independent Directors of MCG have unanimously recommended that security holders vote in favor of the offer, in the absence of a superior proposal and subject to the Independent Expert concluding that the Scheme is in the best interests of MCG security holders.
According to Malcolm Long, Chairman of the Independent Board Committee, Our support for the offer reflects its attractive premium to the recent trading price of MCG, that the offer is fully cash funded and that it provides investors with certainty and an opportunity to crystallise value.
Commenting on the Offer Mark Wiseman, Senior Vice President, Private Investments for the CPP Investment Board said, This transaction enables us to acquire a diversified portfolio of outstanding communications infrastructure assets with leadership positions in their respective markets, stable cash flows and long-term growth potential.
The Independent Directors of MCG have appointed Deloitte to prepare an Independent Expert's Report on the Offer. Deloitte also is undertaking a review of the Ancillary Transaction to determine whether the transactions are at arm's length and that they do not deliver a collateral benefit to Macquarie.
Grant Samuel has acted as independent financial advisor to the Independent Board Committee in relation to any areas of potential conflict.
MCG.AX closed Tuesday's regular trading at A$2.29, up A$0.79 or 53.18%, on 15.38 million shares, compared to a 3-month average volume of 1.62 million shares.
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