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Telecommunications BigAir rejects takeover offer from Clever Communications
Telecommunications BigAir rejects takeover offer from Clever Communications | BigAir rejects takeover offer from Clever Communications |
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| by Stuart Corner | |
| Thursday, 09 October 2008 | |
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However, according to BigAir, at CVA's most recently traded share price of 5.1 cents, the offer represents "a negligible premium to the most recently traded share price of BGL of 5 cents." BigAir further argues that "The negligible share premium, no cash payment, and the volatile performance and illiquid trading of CVA shares represents highly uncertain value that may not be realisable by accepting BGL shareholder." It also points out that Clever would have to find over $0.25m in cash to cover the costs of the transaction. In contrast, it says "BigAir has just turned profitable at an NPAT level and has also achieved strong EBITDA growth over the last year which is forecast to continue in the current financial year," factors which the directors believe are yet to be reflected in its share price. BigAir's directors between them own just under 37 percent of the total shares say they will not be selling their own shares to Clever. BigAir this week also gave its shareholders an update on its progress, pointing out that, at 30 June 2008, it had more than $1.65m in cash and no debt. BigAir's WiMAX networks presently cover Sydney, Brisbane and Melbourne and it says it is in the final stage of deciding whether to rollout networks in Perth and Adelaide. The chairman of Clever, David Williams, claimed that a merger of BigAir and Clever would be in the interests of the shareholders of both companies. "The increased size, scale, market capitalisation and geographic footprint of combining two of Australia largest fixed wireless broadband carriers could result in potential synergy and operational benefits and a re-rating of the merged business which would be well-positioned to actively participate in further industry consolidation," he said. However Clever has not been able make any estimate as to the value of these synergies or when they might be achieved. In the past 12 months Clever Communications has suffered a near-death experience, but on the basis of its most recent results, is turning around. It achieved a net profit of $284,000 for the half year to 30 June 2008, compared to a loss of almost $3.5m in the first half. However, regardless of whether or not BigAir shareholders accept their directors advice and hang on to their shares, the deal has the potential to be derailed by a pending BigAir acquisition. BigAir has pointed out that Clever's offer is conditional on BigAir not acquiring any capital asset of any size, but says it had, prior to the takeover bid being announced, "lodged a confidential, binding offer to acquire certain business assets of another party," and that this offer if accepted, would breach this condition in the offer. Meanwhile, it has been reported that both BigAir and Clever are interested in buying the iBurst mobile broadband network from collapsed Commander Communications. BigAir is already a reseller of iBurst services but is reducing its focus on this business in favour of its more profitable on-net businesses. Clever, meanwhile, responded to the report by issuing a statement saying it had not made, and would not make a bid for iBurst and that it "believes the mobile broadband sector's growth will be dominated by HSDPA and evolving technologies delivered over Australia's tier one carrier 3G networks."
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