Humberside, east Yorkshire telecoms services firm KCOM is set to be taken over by one of Britain's biggest pension funds. The Universities Superannuation Scheme Ltd (USSL) has agreed to buy the struggling firm in a deal valuing it at £504m.
KCOM provides voice and internet-based services to 140,000 consumers and businesses across the city of Hull - the only part of the UK where national incumbent telco BT does not have its own primary network. The local Championship football team Hull City plays at the KCOM stadium.
The company issued a profit warning late last year, and that was followed by a string of management changes, including the replacement of its chief executive and finance chief.
In its half-year report last year, KCOM reported a fall in profits, while net debt soared 60% to £108.5m, mainly due to investment in infrastructure across the firm's Hull and East Yorkshire network. While the firm upgrades its network it has not been fast enough in generating business and consumer income from higher value services over and above basic voice and data access.
It has also failed to significantly break out of its east Yorkshire geographic market, despite winning some public sector contracts elsewhere.
The KCOM board has recommended the 97p a share offer from the trustees of the Universities Superannuation Scheme to its shareholders. The price represents a 34% premium on the closing price of KCOM shares prior to the bid being announced.
Virgin Media had also previously been linked to a bid for the company. The firm was originally founded in 1904 and was floated in 1999 at 225p a share, with Hull council once sitting on a big asset with its rising stock-holding as the share price once reached £16 a share – before the company started to hit the buffers.
USSL has £64bn of assets under management and typically looks to infrastructure-related investments.
Patrick De Smedt, interim chairman of KCOM, said the offer was “a compelling opportunity for shareholders to realise an attractive cash value”.
