Manx Telecom leaps on Basalt's £255m takeover bid

Manx Telecom's shares climbed on Wednesday after the company announced it has reached an agreement for a £255m takeover, while the business also reported a jump in annual revenue.

The Isle of Man based telecoms outift said Kelion Bidco, a newly incorporated company owned by infrastructure investment firm Basalt Infrastructure Partners, has made a recommended offer of 215p per share, or a 15% premium on its closing price.

Kevin Walsh, chairman of Manx, said: "Basalt's cash offer recognises the quality of the business, the management team and the employees and provides certainty to shareholders. After careful consideration and negotiation the board concluded that it would unanimously recommend the offer as being in the best interests of shareholders, employees and other stakeholders."

However, analysts from Peel Hunt argued that the offer undervalued the company's potential, despite constituting a 30.5% premium to the share price's weighted average over the past three months.

"The board has unanimously recommended this offer. In our view, this isn’t a large enough premium for Manx Telecom, given the huge potential we see from Vannin Ventures, and the company's aim to double revenue over the next five years," said a note from analysts.

Meanwhile, for the year ended 31 December the AIM traded company recorded revenue of £81.5m, representing an increase of 4% compared to the year before, though profit before tax dropped by 3% to £11.6m after cost of sales jumped by 13% to £35.4m.

While the revenue increase was driven by 12% and 5% respective rises to Mobile revenue and Global Solutions revenue, cost of sales increased due to a change of product mix and rising maintenance costs.

Manx had cash and cash equivalents of £6.6m at the end of the year, down from £12.3m at the same point the year before,

Gary Lamb, chief executive of Manx, said: "2018 was another year of robust performance for Manx Telecom. Thanks to the hard work of our people, our on-island telecoms business has remained stable - with a solid performance in Fixed Line, Broadband and Data Services, and growth in Mobile - while our international growth business, Vannin Ventures, has seen growth in Global Solutions and has put down strong foundations for the future. Goshawk Communications has made good progress, not least with our recently branded UK proposition 'Audacious'."

A statement from the company also said it had met its target of rolling out full-fibre broadband to 10% of the island’s premises in 2018, with plans in place to invest a similar amount in 2019 in pursuit of reaching 20% coverage by the end of the year.

"We remain positive in the outlook for the group due to the solid underlying revenue, EBITDA and cash flow performance during the year, and are continuing to explore potential growth opportunities with the aim of identifying new products and services for a global audience," said Lamb.

Manx Telecom's shares were up 14.47% at 214.63p at 0915 GMT.