Universities Superannuation Scheme Ltd (USSL), one of Britain’s biggest pension funds, on Wednesday announced a cash offer to acquire Hull-based IT and communications company KCOM Group Plc for about £504 million.

Shareholders of KCOM would receive 97p per share in cash, a premium of 34%.

KCOM’s directors intend to urge its shareholders to vote in favor of the deal, which they called “fair and reasonable.”

After the offer was announced, KCOM shares soared 33% to 96.8p, just below the offer price.

Universities Superannuation Scheme manages about £64 billion. 

Patrick De Smedt, interim non-executive chairman of KCOM, said: “The board believes that USSL’s offer for KCOM provides, on completion, both meaningful, guaranteed cash returns for shareholders as well as a strong, supportive partner in our endeavours to take the business forward to new successes.

“The board believes that the offer of 97p per share represents a compelling opportunity for shareholders to realise an attractive cash value in respect of their shares and recognises the quality of KCOM’s businesses and the strength of their future prospects. 

“For all these reasons, the board unanimously recommends that shareholders accept the offer.”

Mike Powell, head of the private markets group at USSIM, said: “We believe that KCOM is a high-quality business that is well-placed to grow and thrive under private ownership and that is why we have made this compelling offer to shareholders at an attractive premium. 

“With the right capital support and assistance, we believe that KCOM’s management will be able to enhance the quality of its offering, delivering benefits for customers as well as sustainable, long-term returns. 

“USSL’s track record as a long-term and supportive shareholder with extensive experience in regulated sectors makes us an ideal partner for KCOM.”