Brookfield pips Macquarie in $2.7bn move to buy Australian telecoms group Uniti

Canadian investment giant Brookfield Asset Management has reached a binding agreement to buy Australian telecoms group Uniti for A$3.6bn ($2.7bn), as it pursues public-to-private infrastructure deals in the country.

The deal, if shareholders accept it, will conclude a bidding war with Macquarie Group’s asset management arm. It will see Brookfield and its consortium partners pay a premium of almost 60 per cent on the closing share price of the fibre infrastructure group when the first bid was made in March.

The consortium, which includes New Zealand infrastructure investor Morrison & Co and Australian public sector pension scheme Commonwealth Superannuation Corporation, will take Uniti off the Australian Securities Exchange and run it as a private company.

Brookfield’s push into Australia comes amid a mergers and acquisitions boom in the country — a result of pent-up pandemic demand — with A$308bn of deals in 2021 compared with a 10-year annual average of A$100bn, according to data from Refinitiv.

The Uniti agreement follows Brookfield’s failed bid with Australian billionaire Mike Cannon-Brookes in February to buy Australian energy company AGL for A$5.4bn and take it private. Shortly after walking away from the deal, Brookfield announced it would acquire Australian non-bank lender La Trobe Financial for A$1.6bn from US investment giant Blackstone.

Brookfield’s Australian and New Zealand infrastructure assets now include electricity transmission group AusNet Services, utility Intellihub, telecoms group Vodafone NZ, port operator Patrick Terminals, and data centre operator DCI.

The deal with Uniti, which is subject to regulatory and shareholder approval, will end Macquarie Asset Management’s hopes of acquiring the business. Macquarie, in a consortium with Canadian pension fund PSP Investments, offered to acquire the company for A$5 a share in March. Uniti may still consider a better offer, but must pay Brookfield a fee if it breaks the agreement. Macquarie said it had no plans to increase its bid.

Uniti started as a small wireless broadband provider, listing in Australia in 2019 with a valuation of just A$25mn. But it more than doubled in size when it acquired fibre broadband infrastructure owner OptiComm in 2020.

Now the company competes with the Australian government-owned National Broadband Network to connect greenfield real estate developments to the internet via fixed-line fibre optic cables. The NBN has a monopoly on existing housing, but private groups can compete to connect new buildings.

Other recent private telecoms deals in Australia include pension fund Aware Super and Macquarie’s acquisition of previously ASX-listed Vocus last year, and AustralianSuper and Singtel’s purchase of Axiom last month.

Ian Martin, an analyst with New Street Research, said institutional investor interest in telecoms infrastructure had “taken a big turn in the past few years, particularly because interest rates are so low and a lot of capital is looking for these long-term relatively stable income streams”.

He said the Australian market probably did not have much opportunity left for private capital to buy entire telecoms companies, but said the telecoms industry was “calling out for capital investment to support the digitisation of the economy”.

Telecoms groups worldwide have increasingly opted to sell their mobile tower infrastructure to big private investors to free up cash to invest in expensive 5G networks and other digitisation programmes.

“Pension funds like to see something that’s reasonably well established,” said Martin.

Brookfield and Morrison did not give any details about the deal structure or management plans, saying they would only comment once the transaction was complete.

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