The Uniti Group Ltd (ASX: UWL) share price went nuts today, rising 10% before going into a trading halt.
Uniti describes itself as a diversified provider of telecommunications services. Those three segments are ‘wholesale and infrastructure’, ‘communications platform as a service (CPAAS)’ and ‘consumer and business’.
Uniti share price jumps on takeover bid
According to reporting by the Australian Financial Review’s Street Talk, Macquarie Group Ltd‘s (ASX: MQG) Macquarie Asset Management and PSP Investments have made a takeover bid of $5 per share for Uniti Group.
The AFR reported that the current offer is a non-binding, indicative bid, which is similar to the offer from New Zealand outfit Morrison & Co.
Canada’s pension fund PSP is the other bidder for the Uniti business, along with Macquarie.
The newspaper said that the Uniti board will consider the bid. However, the board will need to decide if it’s in the bests interests of shareholders to engage with this bid because it would need to pay a $5 million break fee to Morrison & Co because they had entered into an exclusivity agreement.
It’s possible that the process could now turn into an auction, which would allow multiple groups to do due diligence on Uniti Group.
The AFR noted that the Uniti board wasn’t exactly enthusiastic about engaging with Macquarie Asset Management because Macquarie owns Vocus, which is seen as a competitor.
How much upside is there to this bid?
If the $5 offer were to be accepted, that would suggest a further upside of 7% to the current price after the Uniti share price already went up more than 10% today.
It’s possible that there could be even more bids, so $5 may not be the final price, if a takeover goes ahead.
Final thoughts
I think that with now two parties involved, with perhaps more in the wings, there could be more upside.
The Uniti Group share price is now back to where it was at the start of the year, so the offer price is not exactly an astronomic price. It’ll be interesting to see what happens next.
