Consolidated Communications Proposed Transaction is Financially Compelling and Delivers Certain Cash Value at a Premium Valuation

Rhea-AI Summary

Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) reminds shareholders to vote for the proposed acquisition by affiliates of Searchlight Capital Partners, L.P. and British Columbia Investment Management Corporation, offering $4.70 per share in cash. The Special Meeting is scheduled for January 31, 2024.

Financial Analyst

The acquisition of Consolidated Communications Holdings, Inc. by affiliates of Searchlight Capital Partners and British Columbia Investment Management Corporation represents a significant event for shareholders and potential investors. The offer price of $4.70 per share needs to be assessed against the backdrop of the company's financial health, market position and future prospects as a standalone entity. It is crucial to analyze this offer in the context of the company's recent share performance, industry trends and the capital access challenges that Consolidated may face. The premium over the equity analysts' price targets indicates a strategic valuation which might reflect Consolidated's potential under new ownership or a desire by the acquirers to consolidate their position in the market.

From a financial perspective, the transaction's structure, which offers a cash payout to shareholders, is a key element to consider. This liquidity event could be attractive to investors looking for an exit, especially in a volatile market. Additionally, the transfer of risk to the acquirers is a significant factor, as it suggests that future uncertainties regarding the company's performance are being offloaded from the shareholders to Searchlight and BCI. The implications of this transaction for the company's financial leverage, operational synergies and competitive positioning in the sector are vital points of consideration for stakeholders.

Market Research Analyst

When evaluating the proposed acquisition, it's important to consider the broader telecommunications market and how Consolidated Communications fits within it. The transaction is indicative of ongoing consolidation trends within the industry, where scale can be crucial for survival and growth. The endorsement from independent third-party analysts suggests confidence in the strategic rationale behind the acquisition, particularly in relation to the fully funded Fiber-to-the-Home (FTTH) build plan by Searchlight. This plan could significantly improve Consolidated's infrastructure and service offerings, potentially leading to greater market share and competitiveness.

Understanding the impact of this acquisition on the industry landscape is also critical. It could lead to increased market concentration, which might affect competition and pricing strategies. Furthermore, the acquisition's timing, amidst a weakening near-term operating position as noted by analysts, may offer insights into the perceived urgency of securing capital investment and strategic direction for Consolidated. The response of competitors and the potential for further industry realignment should be monitored closely by stakeholders.

Legal Expert

The legal aspects surrounding the acquisition process are essential for ensuring regulatory compliance and a smooth transition. The role of the special committee, composed of independent and disinterested members of the Board, is to provide an unbiased recommendation that serves the best interests of all shareholders. Their endorsement of the transaction suggests a thorough due diligence process and consideration of fiduciary duties. Additionally, the involvement of reputable legal counsel, such as Cravath, Swaine & Moore LLP and Latham & Watkins LLP, indicates a high level of legal scrutiny.

The acquisition is subject to shareholder approval, which highlights the importance of the voting process. The board's emphasis on the importance of each vote and the potential risk to share price if the transaction is not approved, underscores the transaction's significance. Legal counsel's role extends to ensuring that all communications with shareholders are clear, regulatory requirements are met and the transaction is executed in accordance with corporate governance standards. The legal perspective is critical in assessing potential challenges or delays that could arise during the acquisition process, including antitrust considerations and shareholder litigation risks.

Reminds Shareholders to Vote FOR the Value Maximizing Proposed Transaction

MATTOON, Ill.--(BUSINESS WIRE)-- Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”), has mailed a letter to its shareholders in connection with its upcoming special meeting of shareholders (the “Special Meeting”). Consolidated is reminding shareholders to vote “FOR” the proposed acquisition of the Company by affiliates of Searchlight Capital Partners, L.P. (“Searchlight”) and British Columbia Investment Management Corporation (“BCI”) (the “Proposed Transaction”). The Special Meeting is scheduled to be held on January 31, 2024. Shareholders of record as of December 13, 2023, are entitled to vote at the Special Meeting.

The full text of the letter mailed to shareholders follows:

January 3, 2024

Dear Fellow Shareholders,

You have the opportunity to protect the value of your investment and realize the benefits of the value-maximizing transaction with Searchlight and BCI. In order to participate, you must cast your vote ahead of the special meeting on January 31, 2024. The board of directors of the Company (the “Board”) strongly urges you to vote “FOR” the Proposed Transaction. Your vote is extremely important, regardless of how many shares you own. Not voting is the same as voting against the transaction.

Proposed Transaction Delivers Financially Compelling and Certain Value to Consolidated Shareholders, While Transferring Risk to Searchlight and BCI

Following an extensive and thorough review by a special committee of independent and disinterested members of the Board, the Board strongly believes the $4.70 per share cash offer from Searchlight and BCI is the best risk-adjusted outcome for shareholders, particularly in light of the significant risk associated with Consolidated’s prospects as a standalone public company with limited access to capital.

See Image 1.

Independent Third-Party Analysts Endorse Both the Valuation and the Sale Strategy

The transaction price of $4.70 per share also exceeds equity analysts’ price targets for Consolidated as a standalone public company disclosed prior to April 13, 2023, the day Searchlight and BCI’s non-binding offer was made public.

See Image 2.

The independent third-party analysts who cover our Company agree – this transaction is positive for the Company’s shareholders⁴:

• “Net-net, we view the outcome positively for CNSL shareholders, especially in the context of a weakening near-term operating position.” – Citi, October 16, 2023
• “… we view Searchlight's take-private bid and fully funded FTTH build plan as the cleanest strategy.” – Wells Fargo, August 8, 2023

Cast Your Vote Ahead of the Special Meeting on January 31, 2024

The Board recommends that you vote “FOR” the Proposed Transaction. Casting your vote is the only way for you to secure this compelling cash premium.

If not enough shareholders vote, Consolidated’s share price is at risk of dropping potentially below the pre-announcement price. Maximize the value of your investment and vote “FOR” the Proposed Transaction today.

Vote Your Shares “FOR” Today to Maximize the Value of Your Investment –
Not Voting Is the Same as Voting Against the Transaction

We thank you for your continued support.

Sincerely,

The Board of Directors of Consolidated Communications Holdings, Inc.

Shareholders with questions or who require assistance voting their shares should contact Consolidated’s proxy solicitor, Morrow Sodali. Shareholders may call toll-free: (800) 662-5200 or +1 (203) 658-9400 (international) or email CNSL@info.morrowsodali.com.

Advisors

Rothschild & Co is acting as financial advisor to the special committee and Cravath, Swaine & Moore LLP is acting as its legal counsel. Latham & Watkins LLP is providing legal counsel to Consolidated Communications.

Forward-Looking Statements

Certain statements in this communication are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect, among other things, the Company’s current expectations, plans, strategies and anticipated financial results.

There are a number of risks, uncertainties and conditions that may cause the Company’s actual results to differ materially from those expressed or implied by these forward-looking statements, including: (i) the risk that the Proposed Transaction may not be completed in a timely manner or at all; (ii) the failure to receive, on a timely basis or otherwise, the required approvals of the Proposed Transaction by the Company’s stockholders; (iii) the possibility that any or all of the various conditions to the consummation of the Proposed Transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); (iv) the possibility that competing offers or acquisition proposals for the Company will be made; (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the Proposed Transaction, including in circumstances which would require the Company to pay a termination fee; (vi) the effect of the announcement or pendency of the Proposed Transaction on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with its customers, suppliers and other business counterparties, or its operating results and business generally; (vii) risks related to the Proposed Transaction diverting management’s attention from the Company’s ongoing business operations; (viii) the amount of costs, fees and expenses related to the Proposed Transaction; (ix) the risk that the Company’s stock price may decline significantly if the Proposed Transaction is not consummated; (x) the risk of shareholder litigation in connection with the Proposed Transaction, including resulting expense or delay; and (xi) (A) the risk factors described in Part I, Item 1A of Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and (B) the other risk factors identified from time to time in the Company’s other filings with the SEC. Filings with the SEC are available on the SEC’s website at http://www.sec.gov.

Many of these circumstances are beyond the Company’s ability to control or predict. These forward-looking statements necessarily involve assumptions on the Company's part. These forward-looking statements generally are identified by the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “should,” “may,” “will,” “would” or similar expressions. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements that appear throughout this communication. Furthermore, undue reliance should not be placed on forward-looking statements, which are based on the information currently available to the Company and speak only as of the date they are made. The Company disclaims any intention or obligation to update or revise publicly any forward-looking statements.

Additional Information and Where to Find It

This communication may be deemed to be solicitation material in respect of the Proposed Transaction. The Special Meeting will be held on January 31, 2024 at 9:00 A.M. Central Time, at which meeting the stockholders of the Company will be asked to consider and vote on a proposal to adopt the merger agreement and approve the Proposed Transaction. In connection with the Proposed Transaction, the Company filed relevant materials with the SEC, including the Proxy Statement. The Company commenced mailing the Proxy Statement and a proxy card to each stockholder of the Company entitled to vote at the Special Meeting on December 18, 2023. In addition, the Company and certain affiliates of the Company jointly filed an amended transaction statement on Schedule 13e-3 (the “Schedule 13e-3”). INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT AND THE SCHEDULE 13E-3, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, SEARCHLIGHT AND BCI AND THE PROPOSED TRANSACTION. Investors and stockholders of the Company are able to obtain these documents free of charge from the SEC’s website at www.sec.gov, or free of charge from the Company by directing a request to the Company at 2116 South 17th Street, Mattoon, IL 61938, Attention: Investor Relations or at tel: +1 (844) 909-2675.

Notes

¹ Peers include Frontier Communications Parent, Inc., Lumen Technologies, Inc., Cable One, Inc., Shenandoah Telecommunications Company, ATN International, WideOpenWest, Inc., Altice USA, Inc. and Charter Communications, Inc.
² Unaffected stock price as of April 12, 2023, the last trading day prior to public announcement of the non-binding proposal.
³ Calendar day VWAPs as of April 12, 2023.
⁴ Permission to use quotes neither sought nor obtained.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240102122918/en/

Philip Kranz, Investor Relations

+1 217-238-8480

Philip.kranz@consolidated.com

Jennifer Spaude, Media Relations

+1 507-386-3765

Jennifer.spaude@consolidated.com

Source: Consolidated Communications Holdings, Inc.

FAQ

What is the ticker symbol of Consolidated Communications Holdings, Inc.?

The ticker symbol of Consolidated Communications Holdings, Inc. is CNSL.

When is the Special Meeting for the proposed acquisition scheduled?

The Special Meeting for the proposed acquisition is scheduled for January 31, 2024.

What is the cash offer per share in the proposed acquisition?

The proposed acquisition offers $4.70 per share in cash.

Who are the affiliates proposing the acquisition of Consolidated Communications Holdings, Inc.?

The affiliates proposing the acquisition are Searchlight Capital Partners, L.P. and British Columbia Investment Management Corporation.

What should shareholders do to maximize the value of their investment?

Shareholders should vote 'FOR' the proposed transaction to maximize the value of their investment.