The Uniti Group Ltd (ASX: UWL) share price has missed out on the market selloff on Tuesday after it requested a trading halt.
Why is the Uniti share price in a trading halt?
This morning the telco company requested a trading halt whilst it launched a placement and fully underwritten 1 for 10 pro-rata accelerated non-renounceable entitlement offer.
Uniti is aiming to raise $85 million before costs in order to acquire 100% of 1300 Holdings and its related entities.
According to the release, Uniti has entered into an agreement to acquire Australia's market leader in Phonewords for $78 million.
1300 Holdings owns the largest inventory of Phonewords nationally, with approximately 4,500 Phonewords and priority numbers ('1300', '1800' and '13') currently licensed to businesses and a further ~7,000 Phonewords and priority numbers available to be licensed.
It is the official Phoneword partner of Telstra Corporation Ltd (ASX: TLS) and was formerly majority owned by the telco giant.
In FY 2019 the business delivered EBITDA of $10.9 million. In FY 2020 it is forecast to generate ~$12 million in EBITDA on a pro forma basis.
Management expects the acquisition to deliver, on a pro forma basis, ~28% EBITDA per share accretion in FY 2020. This includes the benefits of cost savings that have been identified.
A potential game-changer.
Uniti chairman, Graeme Barclay, appears to believe this is a game-changer for the company.
He said: "The acquisition of 1300 Australia is a significant event for Uniti Group, delivering material, well defended earnings and remarkably strong free cash flow. In terms of incremental earnings contribution, this acquisition is our largest to date and provides 'infrastructure-like' returns in our Speciality Telco Services pillar, without the usually accompanying capital expenditure."
"This is a special business with material identified upside. We are excited to have been able to add 1300 Australia to the UWL Group, toward the end of what has been a remarkable year for our Company in terms of delivering shareholder value," he added.
