Fidelity offers to buyout Colt for £569 mn

US fund manager Fidelity Investments, the founding investor of European telecommunications holding company Colt Group SA, has made a £569-million ($902 million) offer to takeover the company by acquiring all of its outstanding shares.

Boston-based Fidelity, which owns already two-thirds of Colt's shares, has a commitment of 7.8 per cent interest from some of its shareholders.

Fidelity offered 190 pence per share of Colt. Further to the takeover news, shares in Colt jumped 21 per cent to 189.43 pence yesterday in London.

The stock has risen around 67 per cent in the past one year. The company has a market capitalisation of £1.7 billion.

Colt's independent directors said the offer was not fair and undervalues the company and its prospects.

However, it did not recommend shareholders to vote against the proposal, considering that some ''may prefer the certainty provided by a cash offer now.''

London-headquartered Colt is a multinational telecommunications, IT managed services and data centre services company with its registered office in Luxembourg.

The firm was launched in 1992 as City of London Telecommunications, with financial backing from Fidelity, before its stock market listing in 1996.

Colt provides application hosting, cloud services, interactive voice, Internet service, data networking, telephony, and data centre services among others. Its four business segments include network services, voice services, IT services and data centre services

The company operates through its subsidiaries in the UK, Germany, France, Netherlands and other countries and has offices in 22 countries across Europe, the US and India.

In 2014, Colt reported a 5-per cent fall in revenue at €1.5-billion and a net loss of €28 million, amid customer losses and price declines.

According to Citi analysts, Fidelity's offer implies an enterprise value of 5.8 times the company's anticipated earnings before interest, tax, depreciation and ammortisation.

Colt believes that its planned completion of transformation in 2015 would result in improved performance towards end of year.

It is expected that some third-party buyer might offer a higher price for the telecom group. However, Fidelity had indicated that it might not sell any of its stake to a third party until the end of 2016.

Boston-based Fidelity Investments or Fidelity Management and Research (FMR LLC) is a multinational financial services corporations and one of the largest mutual fund groups in the world.

Fidelity has 10 regional offices and more than 180 investor centers in the US, and with over 40,000 associates its global presence spans eight other countries across North America, Europe, Asia, and Australia.

JP Morgan Cazenove is acting as financial advisor to Fidelity on the deal, while Colt is being advised by Barclays Bank.