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Bidding War Erupts Over ISP KCOM’s Fibre Optic Network in Hull UK

Friday, July 5th, 2019 (7:29 am) - Score 2,243
kcom van in car park

In a surprise twist The Takeover Panel has ordered that the proposed sale of the incumbent telecoms and broadband operator for Hull in East Yorkshire, KCOM, should go to auction after neither of the two bidders were able to declare their offers for the company as “final“. The stage is now set for a c.£600m sale.

The operator has become somewhat of a hot property after it completed their £85mLightstream” rollout during May 2019 (here), which deployed a 1Gbps capable Fibre-to-the-Premises (FTTP) based broadband network to cover around 96% of their addressable network area (200,000 premises); the remaining 4% have gained 75Mbps capable Fibre-to-the-Cabinet (FTTC) technology (a few tiny patches main unserved).

At around the same time as that work was completing they also announced the provisional acceptance of a £504m cash offer for their business from Humber Bidco, which is a subsidiary of pension fund Universities Superannuation Scheme (here). Not long after that they instead opted to accept an even bigger takeover offer of £563m from Macquarie Infrastructure’s team – MEIF 6 Fibre (here).

At this point it seemed almost certain that KCOM would stick with the significantly bigger (some might say too big) offer from MEIF 6 Fibre, although crucially neither offeror has declared their bid final and under rule 32.5 of the Takeover Code that means the process has to be resolved via an auction. In theory this could see the bidding rise even closer to the £600m milestone.

Statement from The Takeover Panel

In order to provide an orderly framework for the resolution of this competitive situation, and in the absence of any alternative auction procedure having been agreed between the parties, the Panel Executive has, after discussions with the parties, ruled that the auction procedure set out in Appendix 8 of the Code shall be applied and that “Day 46” for these purposes shall be Sunday 7 July 2019.

Accordingly, assuming that a competitive situation continues to exist, the auction procedure is expected to commence at 5.00pm (London time) on Sunday 7 July 2019 and, for the purposes of Appendix 8 of the Code:

(a) “Auction Day 1” shall be Monday 8 July 2019;
(b) “Auction Day 2” shall be Tuesday 9 July 2019;
(c) “Auction Day 3” shall be Wednesday 10 July 2019;
(d) “Auction Day 4” shall be Thursday 11 July 2019; and
(e) “Auction Day 5” shall be Friday 12 July 2019.

The Panel Executive has reserved the discretion to amend the auction procedure as appropriate. In particular, the dates referred to above may be subject to change, depending on the circumstances at the time. In the event of an amendment to the above dates, the Panel will make a further statement.

Save for a revised offer made in accordance with the auction procedure, neither offeror will be permitted to announce or to make a revised offer for KCOM on or after 5.00pm on Sunday 7 July 2019.

Following the end of the auction procedure, save with the consent of the Panel, neither offeror is permitted to revise the price of its offer for KCOM from that established by means of the auction procedure, or to introduce any new alternative offer unless, under the normal provisions of the Code, a person other than (i) Humber or MEIF 6 Fibre or (ii) any person acting in concert with either Humber or MEIF 6 Fibre announces a firm intention to make an offer for KCOM.

At this point it’s worth noting that the current highest bidder – MEIF 6 Fibre – has already pledged to expand KCOM’s “fibre network beyond the current footprint” and make the network available via more third-party ISPs (they’ll need to come up with a better wholesale proposition for that to work). Clearly the investors have bigger plans for the operator and won’t just keep their focus to the Hull and East Riding areas.

All of this means that KCOM will have to put the full announcement about their Lightstream network completion back yet again. Generally it would not usually be considered polite to formally announce that until a final offer has been made and accepted (business politics), even though technically they already have (in a very low key local way).

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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1 Response
  1. Avatar Marty

    Wow has anybody got 600m stuffed under their mattress or won the euromillions recently if so it’s your lucky day

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