Wednesday 16 January 2019

CityFibre to be snapped up by consortium in £537.8m deal

News of the agreement resulted in shares in the broadband firm climbing by about 90%.

CityFibre has agreed to a £538 million takeover proposal (Rui Vieira/PA)
CityFibre has agreed to a £538 million takeover proposal (Rui Vieira/PA)

By Holly Williams, Press Association Deputy City Editor

British broadband firm CityFibre has agreed to a £537.8 million takeover by a consortium of investors backed by US banking giant Goldman Sachs.

Shares in CityFibre, which floated on the stock market in 2014, jumped 90% higher after the deal was unveiled.

CityFibre is building its own fibre-optic broadband network in areas across the UK where BT’s Openreach engineering division has yet to upgrade.

It announced a tie-up with Vodafone last year that will see the mobile company market its broadband in about 12 towns and cities, starting with Milton Keynes, Aberdeen and Peterborough, with a target to reach up to 20% of the UK’s population.

The takeover consortium comprises private equity firm Antin’s specialist infrastructure fund and Goldman Sachs’ West Street Infrastructure Partners.

They bid 81p for each CityFibre share – a 93% premium to Monday’s closing price.

Chris Stone, chairman of CityFibre, said: “CityFibre has established itself as a leading independent provider of wholesale fibre infrastructure in the UK and has been on a transformational journey since its IPO (initial public offering) in 2014.”

He added that the board believes the deal “represents compelling value for CityFibre’s existing shareholders and is also a good solution for CityFibre’s long-term funding”.

“This will strengthen the company’s ability to deliver on its vision to provide full fibre infrastructure to 20% of the UK market,” he said.

In full-year results released alongside the deal, CityFibre reported an 80% rise in underlying earnings to £4.5 million for 2017.

Revenues more than doubled to £34.8 million from £15.4 million the previous year.

On a bottom-line basis, the group sank deeper into the red with pre-tax losses of £16.6 million from £12.6 million in 2016.

CityFibre – founded by chief executive Greg Mesch in 2011 – employs 303 full-time staff, boosted by the acquisition of Entanet last year.

Its takeover comes amid intense interest in challenger fibre networks, with Prudential’s infrastructure arm Infracapital bidding to snap up rural broadband provider Gigaclear last month.

Press Association

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