Uniti Group convinced by $3.4b Morrison takeover bid to turn its back on Macquarie

Uniti Group has decided to pursue a $3.4 billion takeover bid from HRL Morrisison & Co and its partner Brookfield Infrastructure.

As a condition of that offer, Uniti Group is required not to further engage with offers from rival bidder Connect Consortium, because of its competing telecom interests.

Connect Consortium, which also put $3.4 billion on the table, is led by Macquarie Infrastructure and Real Assets Holdings, which owns 50 percent of Uniti Group’s rival fibre network infrastructure company Vocus.

Macquarie Infrastructure and Real Assets Holdings and Aware Super purchased Vocus in March 2021 for $3.5 billion. 

HRL Morrison & Co and Brookfield Infrastructure fear that the “due diligence” checks Uniti Group granted Connect Consortium give the rival bidder “access to competitively sensitive information,” according to Uniti Group’s ASX announcement yesterday. 

Earlier in March, the New Zealand-based HRL Morrison & Co made an offer to acquire the Adelaide-based company for $3.1 billion, but were outbid by Connect Consortium.

Connect Consortium, which comprises two investment firms —  Macquarie Infrastructure and Real Assets Holdings and Public Sector Pension Investment Board — included its own condition in its offer.

Connect Consortium required that “Uniti does not enter into binding transaction documents in connection with a proposal to acquire Uniti with another party (including Morrison/Brookfield) for four weeks, even if that other party puts forward a binding proposal on superior terms to the Connect Consortium,” according to Uniti Group's ASX announcement. 

Despite the equal value of the competing offers, Uniti Group said “the board has determined it is in the best interests of Uniti shareholders to engage with the Morrison/Brookfield Consortium” offer. 

Uniti Group has grown significantly since first debuting on the ASX  in February 2019 as “Uniti Wireless” and raising $13.2 million in its IPO.

The company expanded its operations from specialising in fixed wireless broadband and reselling NBN services into wholesale and infrastructure, communications platform-as-a-service and consumer and business.

Uniti Group's expansion of products and services was achieved through an acquisition spree.

The company purchased fibre broadband operator OptiComm in July 2020 for $532 million, and Telstra’s subsidiary fibre-to-the-premises network Velocity for $140 million in December 2020.

Uniti Group's profit and revenue soared in the first half of the 2022 financial year. 

In the half year ended 31 December 2021, Uniti Group reported revenue of $109.5 million, up 101 percent year over year from $54.6 million and net profit after tax of $29.3 million, up 650 percent from $3.9 million the previous year.