Partners Group to acquire Canadian fibre business

The Axia acquisition is the Swiss firm's second investment in the sector in the past 12 months.

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.