![Multiband (Nasdaq: MBND) & MDU Communications Announce Definitive Merger Agreement]( "Multiband (Nasdaq: MBND) & MDU Communications Announce Definitive Merger Agreement")
Atlanta, GA 7/11/12 (
StreetBeat) -- Multiband Corporation ("Multiband"), (
Nasdaq:MBND), a leading Home Service Provider ("HSP") for DIRECTV(R) and the nation's largest DIRECTV Master System Operator ("MSO") for Multiple Dwelling Units ("MDU"), and MDU Communications International, Inc. ("MDU Communications"), (
OTCBB:MDTV), a leading provider, and largest exclusive/bulk provider, of DIRECTV digital satellite television programming, broadband and other communication services to the MDU market announced today the signing of a definitive agreement pursuant to which MDU Communications will merge into Multiband and will be combined with Multiband's MDU business segment. MDU Communications currently owns, operates and services over 75,000 subscribers in 790 MDU properties encompassing 170,000 residences. The transaction will add both scale and leverage to Multiband's existing MDU business segment, which includes approximately 116,000 owned and managed subscribers, and an additional 81,000 subscribers supported by its support center.
Under the terms of the definitive agreement, which has been approved by the Boards of Directors of both companies, holders of MDU Communications common stock will receive a currently calculated 0.759 shares of Multiband common stock for each share of MDU Communications common stock in a tax-free exchange. Multiband will issue 4.3 million shares of its common stock for all issued and outstanding shares of MDU Communications common stock. Based upon a price of $3.00 per share of Multiband common stock, the transaction, including the assumption by Multiband of MDU Communications' outstanding credit facility of $29.7 million, is valued at approximately $42.6 million. The definitive agreement provides for adjustment of the number of Multiband shares if the trading price of Multiband common stock is greater or less than 20% (based on the $3.00) at the time of the merger closing date. In the alternative, Multiband has the option to pay an equivalent $12.9 million in cash for the issued and outstanding shares of MDU Communications common stock. The definitive agreement also provides for contingent consideration to MDU Communications stockholders of record if MDU Communications enters into a definitive agreement with a third party prior to the merger closing date, or within three months after, for the sale of a certain number of subscribers, which would reduce the balance outstanding under their credit facility.
MDU Communications will effectively continue to operate as a subsidiary of Multiband, with the combined business of MDU Communications and Multiband's MDU segment generating approximately $55 million annual pro-forma revenue with pro-forma EBITDA of approximately $8 million post integration, inclusive of direct savings of $4 million per year in redundancy reduction by combining the entities. Additionally, the companies expect reductions in direct costs and the creation of additional incremental recurring revenue streams as the business units are fully combined and transitioned. Multiband, as a whole, operates with 3,700 employees in 33 states with 33 field offices and MDU Communications operates with 102 employees in 17 states with 6 regional offices.
In consideration of the merger, Multiband's management and Board of Directors utilized the following key valuation metrics detailed below in determining the merger price:
-- Multiband currently estimates its subscriber acquisition costs at
approximately $750 per customer through internal build-out of MDU
properties. This would equate to a total cost of over $56 million,
excluding interest, to add a similar number of subscribers as that
acquired through this acquisition, a process that would take two to
three years to complete, with no guarantees that 75,000 subscribers
would be attained.
-- Approximately 70% of the 75,000 MDU Communications' subscribers are
signed to long term exclusive or bulk contracts with many of the
nation's leading property ownership and management companies.
-- Incremental financial benefits can be realized through the introduction
of Multiband's wireless broadband platform to the 75,000 MDU
Communications' subscribers (or the 170,000 wired residences in 790
properties), which would add to future revenue and EBITDA.
-- Commercial customers of MDU Communications (office buildings, stadiums
and arenas) can be layered on to the Multiband internal commercial
platform to increase scale.
James L. Mandel, Chief Executive Officer of Multiband, commented, "Multiband is well positioned to support growth initiatives in the MDU market because we are currently the largest nationwide MDU Master System Operator and have invested significant time, effort and capital into developing our MDU infrastructure, which includes integrated billing software and a world class customer support center. The merger with MDU Communications is a strategic opportunity that will be meaningfully and immediately accretive to our business. MDU Communications has been a recognized and respected provider in the MDU market for over 12 years with a large base of business and capable management. The combined subscriber base will not only add scale to our support services, but will be an important growth center to achieve a higher penetration of multiple revenue streams, namely our push to deliver broadband and digital voice. The merger transaction will position Multiband as the dominate MDU market leader."
Sheldon Nelson, Chief Executive Officer of MDU Communications, stated, "We are pleased to become a part of the Multiband organization and believe that the combination created by our two companies will enable us to better serve our current customers and attract new customers in our markets. Multiband's reputation, financial strength and operating capabilities will enhance our ability to launch new broadband services and meet the expanding needs of our customers. Our stockholders will be receiving shares of a strong, successful company with great potential for diversified growth."
The transaction is expected to close during the fourth quarter of 2012 and is subject to the finalization of a valuation report on MDU Communications, approval by lenders to both companies, and a vote of the stockholders of MDU Communications, as well as certain other customary closing conditions.
Please contact
www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.
StreetBeat DisclaimerDistributed by Viestly
![]()
PennyPayday.com
![]()
Atlanta, GA 7/11/12 (StreetBeat) -- Stocks were mixed in Asian trade. Shanghai rose a half percent and the Hang Seng was up a slight fraction, but the Nikkei and Australia were unchanged. European indexes are generally little changed this morning; the Dax is up a half percent, but the Footsie is flat. US stock futures are up a third of a percent as I write.
Shawshank, VA 7/11/12 (
Shawshank, VA 7/11/12 (
Shawshank, VA 7/11/12 (
Atlanta, GA 7/11/12 (
Atlanta, GA 7/11/12 (
Northern, WI 7/11/12 (
Palm Beach, FL 7/11/12 (
Palm Beach, FL 7/11/12 (
Orlando, FL 7/11/12 (
Orlando, FL 7/11/12 (
Northern, WI 7/11/12 (
