Vocus Communications has sold its 10% stake in merger target Amcom Telecommunications, a move which will give it a better chance at neutralising a blocking move by rival TPG.
It’s all about votes. Vocus wants to merge with Amcom, because when it comes to a vote of shareholders to approve/disprove the deal, the company can’t caste its own holding.
A combined Vocus-Amcom would create a new Australian telco with a market capitalisation of more than $1 billion.
The voting margins are paper thin and, while it is difficult for Vocus to get enough votes, the sale of the stake improves the chances, at least in theory, of enough shareholders approving the merger deal.
The deal, worth about $650 million, would see Vocus acquire 100% of shares in Amcom, paying for the purchase in its own stock.
The Amcom board of directors wants the Vocus deal to go ahead and is upset that TPG Telecom has bought a 19.9% blocking stake.
TPG intends to vote its shares against Vocus. “TPG supports the continued operation of Amcom as a standalone business under the stewardship of the current board of directors and management team,” TPG said.
TPG has no intention to make a counter takeover proposal.
Vocus CEO James Spenceley says his deal to merge with Amcom is getting broad support from both retail and institutional investors.
“The only publicly stated opposition comes from TPG which we believe to be acting in its sole commercial interest, to the detriment of the majority of Amcom shareholders,” Spenceley says.
A shareholder vote is expected in June.
In a separate deal, TPG looks like it will succeed in a $1.57 billion bid for iiNet, which will create a major competitor to the big two Australian telcos, Telstra and Optus.
A combined TPG and iiNet would have 1.7 million customers and revenue of $2.3 billion.