Cincinnati Bell Inks $2.9B Deal With MIRA, Shares Rally

Amid intense speculations, Cincinnati Bell Inc. (NYSE:CBB) recently disclosed that it has finally inked a merger agreement with Macquarie Infrastructure and Real Assets Inc. (“MIRA”), at a valuation of $2.9 billion, including debt. Post its announcement, shares of the local technology company increased 4.1% to close at $14.74 on Mar 13.

Considered to be one of the world’s premier asset managers, MIRA is part of Australia-based Macquarie Group. With a rich history of more than 25 years, MIRA has collaborated with governments and various clients to develop and enhance its capabilities in renewables, infrastructure, agriculture, private credit and real estate with adequate financial backing. Currently equipped with diversified investments of about 600 properties and 155 portfolio businesses, it manages $129 billion in assets.

Per the deal, Cincinnati Bell’s shareholders are entitled to receive $15.50 in cash for each share compared with the previous cash consideration of $14.50. The amended transaction price skyrocketed 101% from the initial closing price of $7.72 on Dec 20. Markedly, the agreement was followed by Cincinnati Bell’s decision to consider MIRA’s up-to-the-minute offer, which constituted all the essential factors of a “Superior Company Proposal”.

Cincinnati Bell’s original suitor — Brookfield Infrastructure Partners (NYSE:BIP) — was given a deadline till Mar 12 to make necessary changes to the existing bidding price of $15.50 per share. However, the Toronto-based conglomerate failed to match up to MIRA’s escalated cash offer, failing which the contract ultimately went in favor of MIRA. Expected to close in the first half of 2021, the transaction, which has been approved by the board of directors, is now subject to certain regulatory and shareholder approvals.

Post closure, the transaction is likely to improve overall financial health of the regional data and voice communications service provider. The deal, which is aimed at fortifying Cincinnati Bell’s augmented fiber network and 5G technology, is considered as the outcome of an efficient sales process to maximize value of its stakeholders in the long run. It will also ensure to provide advanced communications infrastructure to nearly 1.3 million customers across Cincinnati and Hawaii through its upgraded fiber network.

Moreover, the agreement will help Cincinnati Bell to offer flexible data, video, and IP solutions with better network coverage and broadband speed to customers, primarily based in Ohio, Indiana and Kentucky. The transaction is likely to fuel Cincinnati Bell’s growth with a positive cash flow in the days to come.

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. Its move to monetize investments, enhance shareholder returns and prioritize customer satisfaction augurs well for the region’s economic development.

Driven by strong execution of operational strategies, the stock has rallied 56.3% against the industry’s decline of 43% in the past year.

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

Some better-ranked stocks in the broader industry are Just Energy Group Inc. (TSX:JE) and Duke Energy Corporation (NYSE: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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