Probability of the Uniti takeover bid is firming

Probability of the Uniti takeover bid is firming

We understand Commonwealth Superannuation Corp have joined the Morrison & Co/ Brookfield consortium in what could become a 20 per cent/ 30 per cent/ 50 per cent ownership structure in the potential bid for Uniti Group (ASX: UWL).

The fact it is looking at joining the consortium is further proof of Australian superannuation funds’ appetite for what they think would be long-life infrastructure assets that could make moderate and relatively inflation-proof, stable returns for investors.

Based on yesterday’s 2.78 per cent or $0.13 jump in the UWL share price, the market is expecting the consortium, which has exclusive rights to Uniti’s board and management and data room materials until Friday 22 April, to formalise the takeover bid for Uniti Group (ASX:UWL) at $5.00 share price or $3.4 billion sometime next week.

Macquarie Asset Management and Canadian Pension fund, PSP Investments, tried to get into the data room with a $5.00 non-binding indicative bid, and are sitting on the sidelines.  Vocus Group, which was acquired by Macquarie Infrastructure and Real Estate Assets (MIRA) and Aware Super for $3.5 billion in mid-2021, is likely to gain the greatest synergistic benefits out of a theoretical acquisition of Uniti, and time will tell if Macquarie and PSP join the bidding process. 

Should Commonwealth Super emerge with a Uniti stake as expected, it would join several other telecommunication infrastructure assets in its portfolio including major data centres owner CDC Data Centres and Telstra’s mobile phone towers spin-off Amplitel.

In September 2021, Morrison & Co, the Australian Future Fund, Commonwealth Superannuation Corporation and Sunsuper completed the purchase of 49 per cent of Telstra’s telecommunications tower entity InfraCo for a price which valued the business at $5.9 billion. This comprised a portfolio of 8,000 physical towers, mast, large pole and antenna mount structures.

In addition, Brookfield owns rival Australian data centre play, DCI Data Centres.

You can read my previous blog on Uniti here: Uniti Group goes from hunter to hunted

The Montgomery Small Companies Fund owns shares in Uniti Group. This article was prepared 12 April 2022 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Uniti Group you should seek financial advice.

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Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.