NetComm made the announcement to the ASX on Friday. The statement said directors had considered the acquisition to be in the best interests of shareholders. After the transaction is completed, NetCommin will operate as a fully-owned subsidiary of Casa Systems.
They listed the following reasons for their recommendation:
- Significant premium: The consideration of A$1.10 per share represents a:
- 52.8% premium to the closing price of A$0.720 per share on 20 February 2019;
- 49.8% premium to the 1-month volume weighted average price of A$0.734 1 per share;
- 0.9% premium to the VWAP of A$0.781 per share since NetComm announced its FY18 results on 27 August 2018.
- Certainty of value: the 100% cash consideration provides NetComm shareholders with certainty of value and the opportunity to realise their investment in full for cash.
- Limited conditionality: The scheme is not subject to a finance condition and is subject only to conditions customary for transactions of this type, including approval from the Australian Foreign Investment Review Board, court approval and approval by the shareholders of NetComm.
NetComm chairman Justin Milne said: “The scheme is an attractive, all-cash transaction. The NetComm board has unanimously concluded that the Scheme represents a compelling outcome for our shareholders, customers, suppliers and staff.
“NetComm’s customers will benefit from the resultant increase in scale to deploy unique telecommunications technology solutions, as well as a broader product suite and service capability.
“In addition, the scheme is great news for NetComm staff. We believe there will be excellent opportunities for our engineers to be engaged with Casa Systems’ pioneering advanced ultra-broadband 5G solutions for mobile, cable, fixed and converged service providers. Listed on NASDAQ, Casa Systems has revenue of approximately US$300 million and more than 700 employees across 11 countries.”
Casa Systems chairman and chief executive Jerry Guo said: “NetComm represents a strong strategic fit for Casa Systems. NetComm is an innovative and agile organisation that has led the global development of fixed wireless and distribution point broadband solutions.
"We believe that this transaction will create a global leader in the rapidly growing broadband enablement space for service providers across all access technologies. With complementary product portfolios, the combination of Casa Systems and NetComm strengthens our ability to meet the growing demand for increased bandwidth by communications service providers around the world.
"Moreover, it positions the combined company with a broad, highly competitive product portfolio for new 4G architectures and 5G wireless.
"We see substantial benefits to Casa Systems from this acquisition. It will diversify our revenues both geographically and by product channel. It expands Casa Systems’ customer reach with the addition of
several new Tier 1 Global Communications Services Provider customers.
"It adds fixed wireless products to our portfolio, enabling us to address the large 5G fixed wireless access market. And, it has the potential to deliver meaningful benefits through the merger of two complementary, culturally aligned organisations, with immediate EPS accretion for Casa Systems shareholders.”
A leading developer of fixed wireless broadband, wireless M2M/Industrial IoT and fibre and cable to the distribution point (FttDP and CttDP), NetComm appointed an interim chief executive, its former chief technology office Steve Collins, prior to the announcement. Chairman and chief executive Ken Sheridan stepped aside due to family health issues but will continue as an executive director.