Cincinnati Bell has received an unsolicited buyout bid from an infrastructure fund whose name has not been disclosed. The new bid -- valued at $12.00 per share -- comes roughly one month after Brookfield Infrastructure Partners agreed to buy Cincinnati Bell for $10.50 per share.Cincinnati Bell is now in discussions with the unnamed fund. But for now the existing M&A agreement with Brookfield remains in effect, the telecom company's board says.Cincinnati Bell has also warned shareholders that there can be "no assurances that discussions with the Fund will result in a binding proposal or that a transaction with the Fund will be approved or consummated."Brookfield Infrastructure in December 2019 disclosed plans to acquire Cincinnati Bell for $2.6 billion including debt, or roughly 6.5 times annual adjusted EBITDA, according to ChannelE2E’s estimates.Cincinnati Bell owns CBTS and OnX — two MSP (managed IT services provider) subsidiaries that offer end-to-end IT solutions for U.S. and Canadian enterprise customers. Also, Cincinnati Bell in mid-2018 acquired Hawaiian Telcom to gain scale and fiber network infrastructure. That deal included direct access to the historic SEA-US Trans-Pacific fiber cable linking Asia to the United States. Brookfield owns and operates a global network of companies in the utilities, transportation, energy, and data infrastructure sectors, with operations throughout the Americas, Asia Pacific, and Europe. Brookfield Infrastructure is part of Brookfield Asset Management, a global alternative asset manager with more than $500 billion in assets.All of the bidding wars have involved private equity firms -- which are flush with cash (i.e., "dry powder") to pursue buyouts. Indeed, private equity investors are sitting on a record $1.5 trillion in cash as of early 2020, according to Preqin. Yes, that’s trillion — with a T. That is the highest on record and more than double what it was five years ago, CNBC reports. Amid that reality, private equity firms are scrambling to make investments.M&A activity among IT service providers is off to a strong start for 2020. As of late January, ChannelE2E has already tracked 75 M&A deals in 2020. See the complete M&A deal list here.
Cincinnati Bell: The Company Sale Process
The two big questions:- Will Cincinnati Bell reach a deal to sell the company to the mystery bidder?
- Will Brookfield Infrastructure need -- and decide -- to counter the mystery bidder's offer price for Cincinnati Bell?
Service Provider and Technology Bidding Wars
Cincinnati Bell is the latest technology service provider and solutions provider to publicly an M&A bidding war.Additional examples include:- Apollo Global Management outbidding Berkshire Hathaway to acquire Tech Data, a distributor
- Wesco International outbidding private equity firm CD&R to acquire Anixter International, a distributor.