Hull internet provider KCOM's £504m sale moves step closer
KCOM is set to be bought in a deal worth more than £500m
By Hull Daily Mail | Posted: 10 May 2019
Shareholders at KCOM have now been sent formal documents outlining the proposed £504m sale of the company.
Last month, the broadband provider announced it had received an offer from Humber Bidco – a subsidiary of leading pension fund Universities Superannuation Scheme (USS) – to buy the business.
The deal – worth 97p per share – was recommended for approval by KCOM’s shareholders.
The sale of KCOM has now moved a step closer, as those shareholders have been sent what is known as a Scheme Document – outlining details of the proposal.
For the sale to go through, at least 75 per cent of KCOM’s shareholders must back the plans.
Speaking previously, Patrick De Smedt, interim non-executive chairman at KCOM, said: "The board believes that USSL's offer for KCOM provides, on completion, both meaningful, guaranteed cash returns for shareholders as well as a strong, supportive partner in our endeavours to take the business forward to new successes.
“The board believes that the offer of 97p per share represents a compelling opportunity for shareholders to realise an attractive cash value in respect of their shares and recognises the quality of KCOM's businesses and the strength of their future prospects.
“For all these reasons, the board unanimously recommends that shareholders accept the offer."
KCOM provides broadband and telephone services to 140,000 customers and businesses in the region.
It is understood that USS has given assurances that it intends to maintain KCOM’s corporate headquarters and headquarters’ functions in Hull.
First launched in 1904 as the Hull Telephone Department, it became Kingston Communications in 1987 when Hull City Council announced plans for the company to be formed.
It was renamed to KCOM in 2007, when the council sold its remaining stake in the business.
Now, KCOM is expected to be sold to Humber Bidco Ltd for more than £500m.
Mike Powell, head of the private markets group at buyer USSIM, said: "We believe that KCOM is a high-quality business that is well-placed to grow and thrive under private ownership and that is why we have made this compelling offer to shareholders at an attractive premium.
“With the right capital support and assistance, we believe that KCOM's management will be able to enhance the quality of its offering, delivering benefits for customers as well as sustainable, long-term returns.
“USSL's track record as a long-term and supportive shareholder with extensive experience in regulated sectors makes us an ideal partner for KCOM."
Watch: KCOM boss answers your questions
Shareholders will now vote on the deal.
If they back the sale of KCOM, the acquisition is expected to be completed in mid-2019.