Maxcom Telecomunicaciones SAB (MAXCOMCP) agreed to a 764 million-peso ($59 million) takeover by Ventura Capital Privado SA, which pledged to add capital to help the company compete against billionaire Carlos Slim in Mexico.
Ventura, a private-equity firm, offered to buy all Maxcom shares for 2.90 pesos apiece, according to a U.S. regulatory filing yesterday. The Mexico City-based company’s board and investors representing 44 percent of outstanding stock have approved the deal, Maxcom said. The offer, announced after Maxcom shares closed yesterday little changed at 3.62 pesos, represents a 20 percent discount to the stock price.
Maxcom, which offers phone, Internet and television service in several Mexican cities, has struggled to compete against Slim’s America Movil SAB, which controls 80 percent of the nation’s landline phone subscriptions. Ventura’s plan to increase Maxcom’s capital by $22 million as part of the transaction may not be enough, said Alejandro Gallostra, an analyst at Banco Bilbao Vizcaya Argentaria SA. (BBVA)
“It remains pretty complicated,” Gallostra said yesterday in a phone interview from Mexico City. “I’m not sure how they’re going to turn the company around.”
Maxcom has reported a net loss in each of the past four years. It has about 366,000 landlines, compared with 14.4 million for America Movil’s Telefonos de Mexico unit. Manuel Perez, Maxcom’s investor relations director, declined to comment, and representatives of Ventura Capital couldn’t be reached.
Ventura will start a public tender for Maxcom’s shares, and 50 percent of the stock must be offered for the transaction to proceed. The deal is also dependent on a successful offer to exchange Maxcom’s $200 million in 11 percent notes due in 2014 for new bonds the company plans to issue.
“Maxcom has significant potential to continue growing and gaining market share in Mexico,” Ventura said in the statement. “With a stronger balance sheet as a result of the potential debt exchange and capitalization, we plan to position the company as a leading niche telecommunications provider in the country.”
While the new capital may help convince bondholders to renegotiate debt, it will be difficult to use the money both to substantially reduce interest payments and increase network investments, Gallostra said. Both would be necessary to improve Maxcom’s prospects, he said.
While the offer price is a discount to yesterday’s close, Maxcom’s value had been inflated because of speculation a takeover would occur, Gallostra said. He had calculated the company’s takeover value at 3.1 pesos a share.
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