Volante has explaining to do to acquisitions body

Stan Beer
Tuesday, 28 February 2006 20:39

IT Industry - Listed Tech

Federal Government acquisitions watchdog, The Takeovers Panel, has quashed a bid by telecoms equipment supplier Commander (ASX:CDR) to force through a hostile take-over bid of IT products and services provider Volante (ASX:VGL). However, Volante has been forced to provide additional information to the Panel regarding its actions and position in the form of a supplementary 2007 target's statement.

In its submission, Commander had alleged that there were a number of deficiencies in the Volante target’s statement and also alleged that an article published in the Australian Financial Review (AFR) on 1 February 2006, which reported information disclosed in an interview with Ian Penman, Volante’s chief executive officer, contained additional material information which was not contained in the Target’s Statement and, according to Commander, was selective and misleading.

The Takeovers Panel, however, after three weeks of deliberation, declined the application by Commander, following an undertaking from Volante to dispatch a supplementary target’s statement to its shareholders containing additional information which the Panel considered was required by Volante shareholders to make an informed decision with respect to Commander’s offer.

The following actions have been forced upon Volante:

(a) Volante undertaking to the Panel to include in a supplementary target’s statement the following additional information:

    (i) a statement regarding the Volante directors’ reasons for considering that adequate disclosure to Volante shareholders did not require inclusion of a FY 2007 forecast excluding revenue for that part of the Preferred Supplier Contract for which Volante had been awarded preferred supplier status;

    (ii) a statement of Volante’s knowledge of whether or not it is the only preferred supplier for that part of the South Australian Government’s Distributed Computing Support Services procurement contract for which it has been awarded “preferred supplier” status;

    (iii) a statement explaining, or reconciling, in a consistent fashion the different acquisition prices used in the AFR Article and the media release lodged with the ASX dated 3 February 2006 relating to the acquisition. In particular, the Panel noted that in the 1 February AFR article Mr Penman stated that Volante was “working towards an acquisition of its own, worth up to $10 million” whereas the 3 February Media Release described the acquisition as being $5 million (payable in instalments over two financial years) plus additional deferred cash payments dependent on the achievement of various performance hurdles. The Panel believed that such varying statements would likely confuse shareholders;

    (iv) a statement explaining that Volante considers that it would not require any material increase in working capital as a result of the new contracts Volante had recently won or had been awarded “preferred supplier” status, or the acquisition.

In addition, consulting firm Lonergan Edwards, which provided an expert’s report to accompany the Volante target’s statement, has been required to provide additional information to the Panel to justify its affirmation of the Volante's forward looking revenue and earnings forecast.

As a result of Volante providing the Panel with a supplementary target’s statement incorporating the above additional information that the Panel had requested from Volante and Lonergan Edwards, the Panel declined Commander’s application.