Partners Group yesterday offered to acquire Calgary-based Axia NetMedia for C$272 million ($205.4 million; €186.4 million), paying a 49 percent premium over the company's 8 March share price.
Axia designs, installs and operates open-access fibre-based internet and data networks across North America and France. It specialises in the delivery of high-speed broadband to rural and semi-rural areas, Partners said in a statement.
Founded in 1994, the company and its subsidiaries together operate more than 26,000km of fibre networks.
Partners' co-head of private infrastructure Brandon Pater told Infrastructure Investor that talks between the two companies began in November 2015, when Axia appointed an adviser to implement a strategic review of the business. He explained that in Partners' view, the business was under-valued at its current share price due to the nature of the investors in the Toronto Stock Exchange, where Axia is listed.
“[TSX] has a largely retail, Canadian shareholder base. It was tough for these investors to fully value Axia's international business model, especially as the company operates in such a niche area of the infrastructure business,” Prater said. “Axia also has significant near-term capital requirements to build out networks, under its French concessions in particular. As such, we believe there is a mismatch between Axia's share capital and its opportunity set. The stock was under-valued at its share price.”
“We have offered a price that we believe is fair to shareholders and still leaves plenty of room for growth,” he added.
Once completed, the transaction will represent Partners' second foray into carrier-neutral fibre in the past 12 months, following on the heels of its December 2015 close on the $500 million Seabras-1 project. “Strong growth in broadband demand and policy support are creating tailwinds at a time when carriers are shifting away from infrastructure ownership to capacity/spectrum purchases”, Prater said.
The decision to support the acquisition at C$4.25 per share was unanimously approved by the Axia board of directors. The deal is wholly equity-financed, Partners said.