North America’s two largest DirecTV MDU (multiple-dwelling unit) resellers, Multiband and MDU Communications International, have agreed to merge in a deal worth approximately US$42.6m.
Under the terms of the tax-free acquisition agreement, which has…
North America’s two largest DirecTV MDU (multiple-dwelling unit) resellers, Multiband and MDU Communications International, have agreed to merge in a deal worth approximately US$42.6m.
Under the terms of the tax-free acquisition agreement, which has been approved by the boards of both companies, Multiband will issue 4.3 million shares at US$3 per share for all of MDU’s issued and outstanding shares. This equates to MDU’s shareholders receiving 0.759 Multiband shares for each share of MDU common stock that they own. Multiband also has the option under the agreement of just paying US$12.9m in cash for MDU’s shares.
As part of the deal, Multiband will also assume MDU’s outstanding credit facility worth US$29.7m.
On completion, MDU will continue to operate as a subsidiary of Multiband, with the combined business of MDU Communications and Multiband’s MDU segment generating approximately US$55m annual pro-forma revenue with pro-forma EBITDA of approximately US$8m post integration, inclusive of direct savings of US$4 million per year in redundancy reduction by combining the entities.
Commenting on the acquisition, James L. Mandel, chief executive of Multiband, said, “The merger with MDU Communications is a strategic opportunity that will be meaningfully and immediately accretive to our business. MDU Communications has been a recognized and respected provider in the MDU market for over 12 years with a large base of business and capable management. The combined subscriber base will not only add scale to our support services, but will be an important growth centre to achieve a higher penetration of multiple revenue streams, namely our push to deliver broadband and digital voice. The merger transaction will position Multiband as the dominate MDU market leader.”
Multiband has sought to become the dominant DirecTV distributor over the past couple of years through a series of consolidating acquisitions. Having completed its protracted merger with DirecTech in early 2009, Multiband then snapped up WPCS International in mid-2011.
The transaction is expected to close during the fourth quarter of 2012 and is subject to the finalisation of a valuation report on MDU, approval by lenders to both companies and a vote of the stockholders of MDU.
