KCOM to go private in £504m deal

Board recommends that shareholders accept offer from pension fund

Yorkshire telecoms firm KCOM is set to go private in a deal valuing it at £504m.

The publicly listed business is the subject of a bid from Bidco - a subsidiary of USSL, which is the one of the largest private sector pension funds in the UK, managing over £60bn in assets.

The acquisition is subject to approval from KCOM shareholders, but the board of directors is recommending that the deal is accepted.

Patrick De Smedt, interim non-executive chairman at 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 Bboard unanimously recommends that shareholders accept the offer."

KCOM owns the fixed-lane network used by a large chunk of Hull and East Yorkshire. It also has an enterprise IT business.

The firm has struggled over recent quarters, launching a strategic review last November after seeing "poor performance" in its enterprise-focused units. It said that cost cuts may have to be implemented.

Sales for the six months ending 30 September 2018 dropped five per cent year on year to £143.4m.

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."

KCOM's share price rose by over a third after the deal was announced.