Following all the terms of its takeover being met, US asset manager Fidelity has declared its offer for London-based telecoms provider Colt Group (LSE:COLT) unconditional.
Yesterday Colt announced that its shareholders had passed resolutions proposed…
Following all the terms of its takeover being met, US asset manager Fidelity has declared its offer for London-based telecoms provider Colt Group (LSE:COLT) unconditional.
Yesterday Colt announced that its shareholders had passed resolutions proposed by Fidelity, already Colt’s largest shareholder, allowing the Boston-based investor to increase its 66.6% stake and take the business private.
Fidelity then informed Colt’s independent directors that it had received shareholder acceptances of its 19 June offer which, combined with its existing stake and shares held by affiliates, gives it 94.1% of Colt. The US firm will now take the telco private and needs 95% of shares to force a squeeze-out.
Colt’s remaining minority shareholders now have until 4 September to accept Fidelity’s offer, which has garnered some controversy. The investor’s 190p per share offer, lodged on 19 June, represented a 34.4% premium on Colt’s average share price over the last 12 months, yet the company’s independent directors did not recommend that shareholders accept the bid.
Today, the company announced that non-execs Olivier Baujard, Sergio Giacoletto, Katherine Innes Ker, Anthony Rabin and Lorraine Trainer had stepped down.
In spite of the premium, the offer is only equivalent to around 7.0x 2015 EV/EBITDA, a much lower multiple than the low teen figures achieved by Colt’s contemporaries in recent M&A transactions, valuing the group at £1.7bn (US$2.7bn).
While much of the B2B fibre market is booming, Colt has underperformed compared to its peers. Following Fidelity’s offer, Colt unveiled a new strategy at the end of June that involved mothballing its IT services unit and focusing on its core business of offering network, voice and data centre services.
Colt’s directors, advised by Barclays, believed the new direction could lead the company to command a higher valuation in future, but they have not been able to bring its minority shareholders around to this view. Fidelity has been advised by JP Morgan.
Analysts at Citigroup noted in June that the offer had exceeded its 175p target price and suggested that, given the length of time Colt had been available for a takeover approach, minority shareholders might not get a better offer.
