Internet giant KCOM set to be sold in deal worth more than £500m

By Hull Daily Mail | Posted: 25 Apr 2019

Hull internet provider KCOM looks set to be bought in a deal worth more than £500m.

The broadband giant, which recently completed its Lightstream rollout across the city, received the offer from Humber Bidco Ltd – a subsidiary of the Universities Superannuation Scheme.

The offer of 97p per share – totalling £504m – is recommended for approval by KCOM’s shareholders.

Patrick De Smedt, Interim Non-executive Chairman of 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.

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.

Humber Bidco is a subsidiary of the Universities Superannuation Scheme – a trustee of one of the largest private sector pension funds in the UK.

Read more: KCOM scoops national award for Lightstream broadband

Mike Powell, head of the private markets group at 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."

The acquisition is expected to be completed in mid-2019, subject to shareholders at KCOM backing the sale.

The news comes just months after rumours surfaced that Virgin Media was considering a purchase of KCOM.


KCOM share value soars by a third after £500m takeover news

KCOM supplies broadband to customers across Hull and East Yorkshire (Image: Leo Francis)

Shares at KCOM have soared by a third, as the company looks set to be sold for more than £500m.

News broke on Wednesday afternoon that shareholders at KCOM had been recommended to approve the £504m from Humber Bidco Ltd – a subsidiary of pension fund Universities Superannuation Scheme.

More than 50,000 people in Hull bought shares in KCOM when the business was first floated on the London Stock Exchange in 1999.

The popularity of the share sale to the public was so great, demand exceeded the supplies of the stock.

Since the expected acquisition of KCOM was announced on Wednesday afternoon, shares at the company have soared by more than 33 per cent.

Steve Maine, then chief executive at Kingston Communications, announced in 1999 that the business was to float on the Stock Exchange.

Speaking of the offer to buy KCOM, the company’s interim non-executive chairman, Patrick De Smedt, 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.

Read more: What Hull says over Virgin Media's rumoured plans to take over KCOM

“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."

At 2.30pm on Wednesday, shares in KCOM were worth 72.5p each.

Just 20 minutes later, after the announcement had been made, they had rocketed to 97p per share.

Kingston Communications floated on the Stock Exchange at 225p a share back in 1999.

It means people in Hull with shares in KCOM would receive a cash boost if they sold today.

KCOM provides broadband and telephone services to 140,000 customers and businesses in the region.

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 as KCOM in 2007, when the council sold its remaining stake in the business.

The acquisition is expected to be completed in mid-2019, subject to shareholders at KCOM backing the sale.

It is understood that USS has given assurances that it intends to maintain KCOM’s corporate headquarters and headquarters’ functions in Hull. 



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