One of UK's largest pension funds goes to Hull, bids £504m for broadband firm KCOM
Largest shareholders for LSE-listed biz give thumbs-up to proposed sale
KCOM, the Hull-based telco that still has a monopoly fibre network in the city, has agreed to go private in a £504m deal agreed with the USSL, one of the UK's largest pension funds.
Humber Bidco, a wholly owned subsidiary of Universities Superannuation Scheme Ltd (USSL), yesterday lodged a 97 pence per share offer – almost 34 per cent higher than London-listed KCOM's closing share price before the sale was made public.
Patrick De Smedt, interim non-exec chairman at KCOM, a former Microsoft EMEA chairman who founded the Benelux subsidiaries, issued a canned statement:
“The board believes that USSL’s offer for KCOM provides, on completion, both meaningful, guaranteed cash returns for shareholders as well as strong, supportive partner in our endeavours to take the business forward to new success.”
USSL - which had £64bn worth of assets under management as of March last year - has a "track record" of investing in infrastructure businesses in the UK. Its investment manager USS Investment Management has injected cash into Heathrow Airports Holdings and has holdings in NATS and Thames Water, among others.
Two of KCOM's largest shareholders, Teleios Capital Partners and Invesco Asset Management, which own an aggregate 25.5 per cent of the total issued stock (131,758,930), have approved the buy price.
KCOM, formerly Kingston Communications, counts 140,000 consumers and businesses in the East Yorkshire region as customers. It once had greater ambitions, but caved in in late 2015, selling 1,100km of duct and fibre network in 24 cities across Britain to City Fibre for £90m.
Under new CEO Bill Halbert, who joined in 2014, KCOM had stemmed its shrinking revenues by 2016 – they'd fallen for eight straight years. Part of his plan was about targeting enterprise customers with cloud services and broadband services for Hull and the east of the country.
Despite steadying the ship, Halbert left in February 2018 following a boardroom dust-up and a profit warning, which reportedly added pressure on the board to find a buyer.
KCOM, founded in 1904, floated on the London Stock Exchange in 1999 and, as pointed out by the Financial Times, was something of a darling in the City, climbing from 225p on day one to £16. Then the dot-com bust happened.
The FT claimed other suitors, including Virgin Media, had looked at the organisation's books and that rival bidders remain interested. ®