Cable & Wireless Communications parent company of LIME will double the size of its business after agreeing to buy a Caribbean and Central American telecoms group backed by John Malone for about $3bn.
The British telecoms group has agreed terms to purchase Columbus International operators of FLOW, a privately owned telecoms and technology services provider in the Caribbean, Central America and the Andean region.
Cable & Wireless Communications will pay $1.9bn for the Barbados-based business, as well as assume about $1.2bn in net debt from Columbus’s balance sheet.
Mr Malone, chairman of US-based Liberty Global and the Caribbean firm’s largest single minority shareholder, will also end up with a large stake in CWC following the deal.
CWC will pay $708m in cash and issue shares to investment vehicles controlled by the two co-founders of Columbus and Mr Malone. The Columbus shareholders will hold about 36 per cent of shares in the larger group following the deal.
CWC will partially fund the transaction with the placement of shares representing close to 10 per cent of outstanding capital.
The move will help CWC grow, the company said, and accelerate progress towards its strategic goals. CWC said the larger group would expect to generate significant operating cost and capital expenditure synergies.
“This is a transaction that transforms CWC, providing a step-change in growth and returns,” said Phil Bentley, CWC’s chief executive.
The transaction will be earnings neutral in the first full year after completion, and “materially earnings enhancing in subsequent years”. CWC’s dividend policy of 4c per share will be maintained.
Phil Bentley, CWC chief executive
CWC, which has a market capitalisation of about £1.2bn, has transformed itself over the past few years with a series of sales in non-core countries such as Monaco and Macau to focus on the Caribbean and Latin American regions.
The telecoms operator, which was spun off from Cable and Wireless in 2010, moved its headquarters to Miami last year to reflect the strategic shift.
Columbus has about 700,000 residential customers in the Caribbean, Central America and the Andean region. It generated revenue of $505m in the year ended December 31 2013.
In the Caribbean, it provides “triple-play” cable TV and broadband services over its fibre network. Through its wholly owned subsidiary, Columbus Networks, Columbus provides connectivity to 42 countries in the region, as well as capacity and IT services, corporate data solutions and data centre services throughout the Caribbean, Central America and the Andean region.