Telecoms group acquisition worth £504m links Liverpool and Hull
A Liverpool-based pension scheme is behind a £504m takeover deal involving Hull-based internet provider KCOM.
Humber Bidco Limited has agreed a deal to acquire KCOM in a recommended cash offer.
Humber Bidco is a wholly-owned indirect subsidiary of USSL.
USSL, or the Universities Superannuation Scheme Limited, is based in Liverpool’s Royal Liver Building, and is a pension scheme with £64bn of assets under management as at March 31, 2018.
Its members include academic and academic-related staff in many UK universities, mainly those that were universities prior to 1992, when many polytechnics were given university status.
Patrick De Smedt, interim non-executive chairman at KCOM, said: “The board believes that USSL’s offer for KCOM provides, on completion, both meaningful, guaranteed cash returns for shareholders as well as a strong, supportive partner in our endeavours to take the business forward to new successes.
“The board believes that the offer of 97p per share represents a compelling opportunity for shareholders to realise an attractive cash value in respect of their shares and recognises the quality of KCOM’s businesses and the strength of their future prospects.”
He added: “For all these reasons, the board unanimously recommends that shareholders accept the offer.”
KCOM can trace its roots back to an independent telecoms business in Hull which was first launched in 1904 as the Hull Telephone Department.
It became Kingston Communications in 1987 when Hull City Council announced plans for the company to be formed, before being renamed KCOM in 2007 when the council sold its stake in the business.
Across Hull and East Yorkshire KCOM provides voice and internet-based services to 140,000 consumers and businesses.
It also serves large enterprise and public sector organisations that need complex technology solutions to serve customers better and adapt to an ever-changing competitive and regulatory environment, and it serves UK-based multi-site organisations that rely on connectivity as part of their business operations.
Recent speculation had linked Virgin Media with a possible bid for KCOM.
USSL, through its investment manager USS Investment Management Limited (USSIM), is a long-term owner of assets with a track record of investing in UK infrastructure and infrastructure-like businesses.
USSIM’s private markets group has experience of investing around the world and in the UK across a wide range of private asset classes.
As at March 31, 2018, it managed more than £15bn of private market assets, including investments in Heathrow Airports Holdings, L1 Renewables, Moto Hospitality, NATS and Thames Water.
Mike Powell, head of the private markets group at USSIM, said: “We believe that KCOM is a high-quality business that is well-placed to grow and thrive under private ownership and that is why we have made this compelling offer to shareholders at an attractive premium.
“With the right capital support and assistance, we believe that KCOM’s management will be able to enhance the quality of its offering, delivering benefits for customers as well as sustainable, long-term returns.
“USSL’s track record as a long-term and supportive shareholder with extensive experience in regulated sectors makes us an ideal partner for KCOM.”
The acquisition is expected to be completed in mid-2019.