Uniti Group will see its value double following its biggest takeover yet

Uniti Group’s value will push past $1 billion should its takeover of Melbourne-based OptiComm meet with shareholder approval.

OptiComm chief executive Paul Cross.

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Uniti Group has announced a half billion dollar takeover of ASX-listed rival OptiComm for a mix of cash and shares.

The company also announced a profit upgrade from its last forecast announced in February and now expects to deliver EBITDA of $18.5-$19.5 million, up $1 million.

Adelaide-founded Uniti will pay $532 million for OptiComm, comprised of $407 million in cash, and about 84 million Uniti shares worth $125 million.

Based on current share prices, the combined value of the merged entities will be about $1.03 billion.

Uniti told the ASX it will fund the acquisition via a $270 million entitlement offer, $150 million in new debt and the 84 million new shares.

OptiComm shareholders will be able to opt for one of five combinations of cash and shares, and shareholders will also receive a 10c per share special dividend should the deal go through.

OptiComm’s directors have unanimously recommend that shareholders of the Melbourne-based company vote in favour of the deal, with a meeting on the issue to be held in September.

Uniti started life as a listed company as Uniti Wireless, focused on line of sight fast broadband, but has since acquired LBNCo, Fuzenet, FoneDynamics and 1300 Australia.

Chairman Graeme Barclay said the buyout would accelerate the company’s strategy in private fibre infrastructure ownership.

“Shareholders are expected to benefit from significant value creation from this transformational transaction and from the combined scale and capabilities of a more diverse telecommunications infrastructure company with a large pipeline of long-term growth opportunities,” Mr Barclay said.

“The Uniti board is confident that we are well placed to significantly grow the fibre footprint, and maximise the efficiencies of the combined businesses to drive long-term, sustainable shareholder value.”

Uniti chief executive Michael Simmons said the deal would increase the company’s fibre network build capacity and strengthen its fibre to the premises market position.

“Our earnings growth in the second half and increased guidance without an acquisition being completed in H2 is evidence of our ability to integrate acquisitions to achieve efficiencies and growth.

“We are confident of achieving the same outcome for shareholders from the OptiComm acquisition.

Eligible Uniti shareholders will be able to subscribe for new shares on a one for 1.68 basis at a price of $1.40.

Uniti shares were trading almost 8 per cent higher at $1.66 today. The retail entitlement offer will close on July 6.

Uniti shareholders will own about 86 per cent of the enlarged company after the deal finalises. The deal values OptiComm at $5.20 per share including the 10c dividend. OptiComm shares have increased from $5.02 before the deal was announced to $5.38.

OptiComm listed on the ASX in August last year valued at $2 meaning the deal will deliver a 165 per cent return.

The deal will have to be ratified by a shareholder vote, with a meeting expected to be held in September with an independent expert’s report into the deal expected in August.