Amcom acquired the majority of its 23.4 percent stake in iiNet in 2006 at an average cash entry price of $1.14 per share. They are now worth $2.87.
The proposal will be put to Amcom shareholders at a general meeting to be held in early August 2011. However the final decision will remain with the board. Even if shareholders approve the plan, the board says it remains open to accepting an offer for the shares from a third party if it determines such to be in the best interests of shareholders.
Amcom CEO, Clive Stein, said: "Amcom and iiNet service different segments of the telecommunications market and have different strategies to grow and continue delivering shareholder value in the future. For these reasons, we believe Amcom shareholders should be allowed to choose their own mix of exposure to the consumer and enterprise markets and both businesses would benefit by moving forward independently of each other."
He added: "Amcom now has considerable scale. We have experienced consistent double digit organic growth in our core business over several years and we are now strategically placed to leverage the emerging telecommunications and IT markets. The recently announced partnership with Dimension Data unit, BlueFire Corporation reinforces the strategic direction of the business in the emerging hosted cloud market."
"This transaction should provide greater clarity on the value inherent in Amcom and provide our shareholders with greater discretion in managing their own investment portfolio. The board believes this proposed distribution is in the best interests of Amcom shareholders. It should deliver greater visibility of the worth of each company in the marketplace, and provide both companies the opportunity to move forward and prosper independently of each other."
In February Amcom announced plans to resell cloud based IT services provided by Dimension Data subsidiary, BlueFire. That announcement followed its move into the hosted telephony market in May last year with the acquisition of IP Systems.
Stein made it clear that the company saw a strong synergy between these services and its network assets. He said at the time: "We are in a unique position to leverage our extensive fibre networks and customer base to deliver private cloud services across our secure network. Our customers are increasingly looking for these services. We anticipate that demand will grow exponentially and we are ready."
This exploitation of cloud and network was exactly the message coming from Telstra yesterday when it announced plans to invest $800m in cloud computing data centres over the next five years.
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