It was back in November last year that the National Grid announced that it wanted to demerge its wireless business as it sought to concentrate of its core energy and gas businesses in the UK and US. It also plans to offload its much smaller US Wireless business.
National Grid said that it had received approaches from various parties for the UK wireless business, but in the end decided that a sale to Arqiva via its parent company Macquarie UK Broadcast Ventures, represents the most attractive and certain outcome for our shareholders.
It is clear why Arqiva (Macquarie) was willing to paid a multiple of 19.3 times EBITDA for National Grid Wireless, as the Warwick, UK-based company owns an important slice of infrastructure within the UK.
It has almost 14,500 tower sites and other transmitters. Its infrastructure is used by the five UK mobile operators namely Vodafone, Orange, O2, T-Mobile and 3, as well as television companies such as the BBC, ITV, Channel Four, and BSkyB.
However, the deal is likely to subject to intense scrutiny by the UK Office of Fair Trading because Arqiva and National Grid each own around half the transmission masts used by UK TV and radio stations. If the deal goes through, then Macquire will effectively have a monopoly on the UK broadcast transmission network.
Arqiva was formed back in December 2004 after Macquarie lead a consortium to purchase the broadcast transmissions business of cable operator NTL. NTL had first put the unit, known as NTL Broadcast, up for sale in 2001, but was unable to find a buyer to offer a satisfactory price. In the end, Macquarie paid 1.27bn pounds ($2.5bn) for it in 2004.
Macquarie already owns a lot of infrastructure in the UK, including Thames Water, several airports, and motorway service chain Moto, and the M6 toll road.
The Australian bank was also one of the foreign bidders last year for the largest telecom operator in Hong Kong, namely Pacific Century CyberWorks Ltd. However, its bid was defeated when the Chinese government used a state owned company to oppose the acquisition.
National Grid also announced that it will return 1.8bn pounds ($3.55bn) to shareholders by extending its share buyback scheme.