Lumen Technologies (NYSE: LUMN) and Stonepeak say they have signed an agreement that will see Lumen sell its Latin American business to the investment firm for $2.7 billion. The companies expect the deal to close in the first half of 2022, upon receipt of all regulatory approvals in the U.S. and “certain countries” where those assets operate, as well as the satisfaction of other customary conditions. At that time, Stonepeak will operate the business as a standalone portfolio company.
According to an online “LATAM Handbook,” Lumen maintains key contacts for Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, Peru, and Venezuela. Assuming the deal closes as expected, the company will maintain its headquarters in the U.S. under the management of its current leadership team, headed by Hector Alonso, Lumen's president for the region. Lumen will hold a strategic relationship with the spin out that will include reciprocal reselling and network arrangements.
Lumen says the price represents approximately a 9X premium on the Latin American business' 2020 Estimated Adjusted EBITDA, provides additional capital for investments elsewhere, and offers greater flexibility for capital allocation, debt reduction, and the continued evaluation of share repurchases.
"This transaction unlocks value for our shareholders while allowing us to maintain our global presence through our strategic relationship with the New LATAM Company," said Lumen President and CEO Jeff Storey. "This transaction allows Lumen to focus investments in key areas of the business to drive future growth while providing flexibility for our capital allocation strategy."
"Lumen's Latin American business is a market leader with a strong footprint and exciting potential for expansion," said Brian McMullen, Stonepeak senior managing director. "Stonepeak has been an early and active investor in digital infrastructure globally and we are looking forward to applying our experience and additional capital to Lumen's Latin American business."
"Stonepeak has made it very clear that they are committed to enterprises that operate in Latin America. This transaction provides the New LATAM Company with more autonomy to serve its customers and the enhanced ability to react to and invest in changing market conditions in the Latin America region," added Alonso. "These customers will experience the same world-class network and services they have come to expect from a leadership team focused on their success."
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