You hear about brands going public through SPACs, direct listings, or traditional IPOs all the time—but what about the reverse? Many companies are completing public-to-private transactions, also referred to as "going private."
What tickers are calling it quits in 2021 and taking their equity from public to private?
Cincinnati Bell is going private after decades on the NYSE.
Australian investment firm Macquarie Infrastructure Partners has signed off to acquire Cincinnati Bell for $2.9 billion. This means that Cincinnati Bell will be retiring its "CBB" ticker and going private.
According to the terms of the deal, the centuries-old telecommunications company will use the money to fund fiber broadband networks that will serve hundreds of thousands of residents in Ohio, Kentucky, and Indiana.
Meanwhile, CEO Leigh Fox and other executives are retaining their post and cashing out a collective $37 million in equity and "change in control" payments.
Retail shareholders who own a stake in CBB will get cash for their equity, which has increased in value by 330 percent since August 2019 but diminished by upwards of 80 percent since the early aughts.
Wanda Sports Group went private at the beginning of the year.
Wanda Sports Group Co. Ltd. (formerly under the ticker "WSG") delisted from the Nasdaq Exchange in January. The company had a stock value of $2.55 per ADS (American depositary share). The cash out came to a value of $100 million.
Retail investors cashed out while the subsidiary Wanda Sports & Media acquired the equity.
Cardtronics finalized its public-to-private transaction this year.
By December 2020, ATM operator Cardtronics Inc. (formerly under the ticker "CATM") had entered a DA (definitive agreement) to be bought out by Hudson Executive Capital and Apollo Global Management.
The firms acquired the company for the equivalent of $35 per share, or a $2.3 billion enterprise valuation, and the company's stock was privatized early 2021.
EXFO went private this year
In July, EXFO (formerly "EXFO" on the Nasdaq) announced it was going private amid an acquisition from VIAVI Solutions Inc. Shareholders received $6 per share in cash at the outset of the deal.
Founder and executive chairman Germain Lamonde said of the public-to-private transaction, "This transaction is in the best interests of all of EXFO’s stakeholders."
Why companies go from public to private
Private equity firms have a surplus of cash—and they plan to use it. By acquiring companies and subsequently privatizing them, not only do the formerly public company's executives make off well, but the private acquirer's leaders also see a substantial profit.
The rate of public-to-private transactions fell in 2020 amid the COVID-19 pandemic and related stock market behaviors (the number of retail investors with active brokerage or investing app accounts increased drastically during this time). However, experts expect the practice to see renewed growth moving forward. As startups and legacy firms hit the IPO roadshow, boards who already have a stock market presence are deciding whether or not to remain public.
Whereas undervalued companies can find solace in the public market, increased interest from acquisition-focused investors could change the scope moving forward. Seeing how well Cincinnati Bell executives are making out amid their privatization might inspire others to do the same.