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Cincinnati Bell to Buy Hawaiian Telcom, OnX for $851 Million

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On Monday, Cincinnati Bell Inc. (CBB - Free Report) announced that it will buy Hawaiian Telcom Inc. for $650 million and OnX Enterprise Solutions for $201 million to expand its network and enterprise IT services.

According to reports, Cincinnati Bell will pay both in cash and in new company shares for the Honolulu-based Hawaiian Telcom. Current Hawaiian Telcom shareholders can choose to be paid completely in cash, new stock, or opt to be paid about 60% in cash and 40% in stock. OnX, based in Toronto, will be bought entirely with cash.

These mergers will allow Cincinnati Bell, based in the Midwest, to increase its geographical scope. After the deals have been completed, Cincinnati Bell will have 14,000 miles of fiber. The company will also have access to an undersea cable connecting with Asia.

While OnX will be merged completely with Cincinnati Bell, Hawaiian Telcom will retain its name and its separate brand identity.

Additionally, Hawaiian Telcom will have two seats on the combined company’s Board. These seats will be filled with two Hawai’i residents to ensure that Hawaiian interests are taken into account when decisions are made.

Leigh Fox, president and CEO of Cincinnati Bell, said in a statement, “Cloud migration, the need for fiber infrastructure that supports 5G-ready, high density data transmission and IoT are the key trends that will define telecommunications in the future.”

“The implementation of our refined strategy, coupled with today’s combinations, will help build two distinct businesses with the appropriate scale, structure and leadership to deliver superior operating results, while providing strategic optionality from a diversified but complementary portfolio of assets,” said Fox.

In reaction to the news, shares of Hawaiian Telcom jumped 18% whereas shares of Cincinnati Bell dropped 8%.

Cincinnati Bell expects for the OnX transaction to close in the fourth quarter of 2017, while the Hawaiian Telcom transaction will close in the second half of 2018.

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