Hawaiian Telcom to Merge with Cincinnati Bell
Hawaiian Telcom, and Cincinnati Bell today announced they have reached an agreement to merge under a cash and stock transaction valued a $650 million.
Under the agreement, Hawaiian Telcom stockholders will have the option to elect either $30.75 in cash, 1.6305 shares of Cincinnati Bell common stock, or a mix of $18.45 in cash and 0.6522 shares of Cincinnati Bell common stock for each share of Hawaiian Telcom. That’s subject to proration such that the aggregate consideration to be paid to Hawaiian Telcom stockholders will be 60% cash and 40% Cincinnati Bell common stock.
Upon the closing of the transaction, Hawaiian Telcom stockholders will own approximately 15% and Cincinnati Bell stockholders will own approximately 85% of the combined company.
Hawaiian Telcom and Cincinnati Bell will continue to maintain their separate local brand identities and operations, while combining their buying power and resources to continue to focus on delivering integrated communications and technology solutions for their local communities.
“Cincinnati Bell’s track record of success and commitment to investing in the build out of its regional fiber network in both urban and non-urban areas over the past decade makes it a great partner for us,” said Scott Barber, Hawaiian Telcom president and chief executive officer. “We look forward to sharing our companies’ fiber expertise and enhanced service offering as we continue to expand our Next-Generation Fiber Network throughout the state of Hawai‘i. With our highly complementary values, distinctive brands and vision focused on fiber as the future, and our shared commitment to the communities in which we operate, I am confident this partnership will provide great opportunities for growth and value creation to both Hawaiian Telcom and Cincinnati Bell stockholders, along with our customers and partners.”
The merger will bring together two companies with a shared focus on investing in and monetizing its fiber networks.
Company officials say the merger will combine Hawaiian Telcom’s 1,300 employees with Cincinnati Bell’s 3,000 to create a “bigger and stronger enterprise that will foster greater innovation and deliver more competitive products and services to customers.”
The companies’ combined fiber networks exceed 14,000 fiber route miles. In addition, Hawaiian Telcom provides Cincinnati Bell with direct access to the 2.6TB of transpacific fiber cable capacity linking Asia and the US, which expands Cincinnati Bell’s route diversity and gives the combined company exposure to large, data-hungry demographics on both sides of the Pacific.
According to today’s announcement, Hawaiian Telcom will continue to be locally managed from Hawai‘i and its existing union labor agreements will be honored. Hawaiian Telcom will also name two directors to the combined company board of directors and the seats will be held by Hawai‘i residents.
US Senator Brian Schatz (D-Hawai‘i), lead Democrat on the Senate Subcommittee on Communications, Technology, Innovation, and the Internet commented on the merger saying, “Hawaiian Telcom has been an engaged corporate citizen in Hawai‘i for generations. The hundreds of jobs it provides and the services it offers are vital to Hawai‘i’s local economy. As the lead Democrat on the Commerce Committee’s telecommunications subcommittee, I will carefully review the proposed merger and closely monitor its potential impact on local jobs as well as the telecommunications services it provides for Hawai‘i consumers.”
Hawaiian Telcom was established in 1883 and Cincinnati Bell has been around since 1873.
The transaction is subject to certain customary closing conditions including federal and state regulatory approvals and approval by Hawaiian Telcom’s stockholders. The merger is expected to close in the second half of 2018.