New agreement sees Brookfield Infrastructure paying more for Cincinnati Bell, but better bid surfaces

Cincinnati Bell Inc. (NYSE:CBB) says it has reached an amended definitive merger agreement with Brookfield Infrastructure and its institutional partners that will see Brookfield pay another $2.00 per share of common stock to acquire the service provider. The boost in sales price came in the wake of a competing offer for Cincinnati Bell after the original agreement with Brookfield came to light (see “Brookfield Infrastructure to buy Cincinnati Bell for $2.6 billion”). However, earlier today Cincinnati Bell announced it had received another competing offer, a binding one from Macquarie Infrastructure and Real Assets Inc., offering a dollar more per share.

Brookfield had agreed to increase its offer to $12.50 per share in cash for each outstanding common share of Cincinnati Bell. The amendment raises the value of the transaction to approximately $2.745 billion, including debt. The $12.50 per share represents a 62% premium to the closing per share price of $7.72 on December 20, 2019, the last trading day before the merger agreement was announced. However, Macquarie is now offering $13.50 per share.

The original competing bid, received January 22, 2020, offered $12.00 per outstanding common share via a non-binding proposal. The bid came from an infrastructure fund Cincinnati Bell's Board did not further identify. The fund, apparently Macquarie, raised that offer to $12.50 per share on February 27, a figure Brookfield matched the next day.

"After receiving a binding proposal reflecting a higher purchase price for Cincinnati Bell, Cincinnati Bell advised Brookfield of the proposal, which led to Brookfield increasing the price of our transaction with them,” explained Lynn A. Wentworth, chairman of the Cincinnati Bell Board of Directors in a press release announcing the amended deal with Brookfield. “Following these discussions, our Board approved the amendment to the merger agreement. We believe the amended merger agreement is a result of a well-run sales process that allows our shareholders to realize higher value for their shares."

However, the deal with Brookfield is on hold while the Board reviews the new bid from Macquarie. "Consistent with its fiduciary duties, Cincinnati Bell's Board, in consultation with its advisors, will carefully review and evaluate the Proposal to determine the course of action that is in the best interests of the Company and its stakeholders," the Board stated via a press release. "The Brookfield merger agreement remains in effect and the Cincinnati Bell Board has not changed its existing recommendation in support of the transaction with Brookfield."

The transaction with Brookfield is subject to customary closing conditions, including the approval by Cincinnati Bell's shareholders, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and certain regulatory approvals. The parties had expected the deal to close by the end of this year. It is uncertain whether a new negotiation with Brookfield or an acceptance of the new bid from Macquarie will affect that time frame.

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