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Manx Telecom agrees to around £255.9mln takeover bid from investment vehicle, Basalt Infrastructure Partners

The offer, being made on Basalt unit Kelion Bidco Limited, will see Manx shareholders receive 2017.1p in cash, plus an already declared final dividend of 7.9p per share, giving a total entitlement of 215p per share
Takeover bid
In early morning trading, Manx telecom shares were trading just below that level at 214p, up 14% on Tuesday’s closing price

Manx Telecom PLC (LON:MANX) saw its shares ring higher on Wednesday after the AIM-listed firm agreed to an around £255.9mln takeover bid from infrastructure equity investment vehicle, Basalt Infrastructure Partners.

The offer, being made on Basalt unit Kelion Bidco Limited, will see Manx shareholders receive 2017.1p in cash, plus an already declared final dividend of 7.9p per share, giving a total entitlement of 215p per share.

READ: Manx Telecom’s hearing software adds tech edge to steady telecoms base

Commenting on the offer, Manx’s chairman, Kevin Walsh said: "Since its IPO in 2014, Manx has performed well and delivered consistent returns for its shareholders through resilient earnings, strong cash generation and a growing dividend.

Best interests

“Basalt's cash offer recognises the quality of the business, the management team and the employees and provides certainty to shareholders. After careful consideration and negotiation, the Board concluded that it would unanimously recommend the offer as being in the best interests of shareholders, employees and other stakeholders."

Steven Lowry, a partner at Basalt, added: “We are keen to support the company through its next phase of capital investment, which includes funding fibre to the premises, its commitment to Vannin Ventures and the future requirement of a 5G network rollout.“

The takeover came as Manx Telecom also reported full-year 2018 results showing a slight increase in underlying adjusted earnings (EBITDA) to £27.2mln, up from £27.1mln in 2017, as revenue increased to £81.5mln from £78.5mln.

The group’s final dividend of 7.9p, up from 7.5p in 2017, made a total pay-out of 12.0p for the full year, up from 11.4p in 2017.

In afternoon trading, Manx Telecom shares held just below the total offer level at 214.50p, up 14.4% on Tuesday’s closing price.

Premium not large enough

In a note to clients, however, analysts at Peel Hunt suggested that the premium Baslat is paying for Manx Telecom is not large enough.

They said: “On a peer group dividend yield of 5.7%, this values the core on 220p, our price target, but then we have the optionality for Vannin Ventures, which led the company to state it will double Group revenue in five years.

“This implies a CAGR of 15% vs 1% CAGR for the previous five. Whilst we reiterate our price target of 220p, we believe, even this, potentially undervalues the optionality from Vannin by at least 25p.”

 -- Adds analyst comment, updates share price --



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