Suitor ups its ante for parent company of Hawaiian Telcom

In what is turning into a high-stakes poker game, Brookfield Infrastructure on Wednesday made its third all-cash offer for Hawaiian Telcom’s parent company and matched the previous all-cash bid made two days earlier by Macquarie Infrastructure/Real Assets Inc.

Toronto-based Brookfield raised its offer for Hawaiian Telcom parent Cincinnati Bell to $13.50 a share in cash from its previous bid of $12.50 a share. The new offer values the transaction at about $2.8 billion, including debt. The amended price represents a 75% premium to the closing price of $7.72 on Dec. 20, the last trading day prior to the date when the initial deal was agreed upon.

Still, the bidding war may not be over. Investors bid up Cincinnati’s Bell’s stock 1%, or 14 cents, to $14.64 after the deal was announced. The closing price represents an 8.4% increase from the $13.50 offer price. Cincinnati Bell’s shares are up 39.8% this year.

Brookfield now has raised its offer twice from the initial bid of $10.50 a share it made in December. Brookfield sweetened its bid to $12.50 a share last week after Macquarie/Real Assets offered $12 a share in January. Then after Macquarie/Real Assets on Monday topped Brookfield’s offer with a new proposal of $13.50 a share, Brookfield came back again Wednesday to match that bid. Brookfield likely decided to match the Macquarie/Real Assets offer rather than exceed it because Cincinnati Bell’s board repeatedly has said it prefers to deal with Brookfield.

Cincinnati Bell said it “carefully reviewed” the terms of the amended Brookfield proposal and determined that the Brookfield agreement was “in the best interest of Cincinnati Bell and its shareholders.”

Cincinnati Bell’s board approved the amended deal and recommends that Cincinnati Bell’s shareholders vote in favor of adopting the amended Brookfield merger agreement.

The transaction is subject to Cincinnati Bell’s shareholders approval, as well as regulatory approvals, and is expected to close by the end of this year.

If Cincinnati Bell decides not to accept Brookfield’s offer, it will be liable for a breakup fee of $23.1 million, which is an increase from the previous breakup fee of $21.39 million.

Cincinnati Bell acquired Hawaiian Telcom in July 2018 for $650 million in stock and cash, making Hawaiian Telcom shareholders new owners of Cincinnati Bell stock. At the time the Hawaiian Telcom deal closed, Cincinnati Bell’s stock was trading at $15.70 a share. The shares later plunged and were trading at $7.72 when Brookfield made its first all-cash offer of $10.50 a share in December.

Hawaiian Telcom, which has about 1,200 employees, has been heavily investing in its fiber-optic network to provide high-speed internet as well as video services through Hawaiian Telcom TV.

BIDDING WAR

Hawaiian Telcom parent Cincinnati Bell has received five all-cash buyout offers as two bidders battle it out:

DATE COMPANY OFFER PRICE PER SHARE

Dec. 20 Brookfield Infrastructure $10.50

Jan. 22 Macquarie/Real Assets $12

Feb. 27 Brookfield Infrastructure 12.50

March 2 Macquarie/Real Assets $13.50

March 4 Brookfield Infrastructure 13.50

Source: Bloomberg