Australian Takeovers Panel orders 5GN's Webcentral takeover to be pushed back

The Australian Takeovers Panel has officially put 5G Networks' (5GN) takeover of Webcentral Group on hold by issuing interim orders to push back the acceptance date of the transaction.

The interim orders require 5GN to not process any acceptances received from last Friday onwards in relation to its off-market takeover bid of Webcentral.

5GN must also extend the offer period in relation to the takeover by at least a week so it can close no earlier than November 3, the interim orders stated.

Despite this extension, the panel clarified that the interim orders still allow for Webcentral's shareholders to continue to accept or reject the takeover offer if they wish to do so. 

Webcentral's board has also continued to unanimously back the deal despite the interim orders.

The panel's interim orders came in response to an application filed by investment and financial services firm Keybridge Capital that had requested for orders to compel 5GN to not process any acceptances and for 5GN to extend its bid's offer period by three weeks. 

Keybridge also sought for final orders that provide Webcentral shareholders with withdrawal rights under the 5GN bid -- unless the bid is withdrawn -- and for all shares acquired in contravention of section 606 of the Corporations Act 2001 to be vested in Australian Securities and Investments Commission for sale and further disclosure.  

In its application, Keybridge flagged various issues with the takeover, alleging that disclosures within 5GN bidder's statement and Webcentral's target's statement in relation to the 5GN conditional funding created "a highly coercive effect on shareholders to accept the [5GN] bid to cause control to pass in a manner inconsistent with that of an efficient, competitive, and informed market".

Keybridge also claimed the statements made by the Webcentral directors -- that they would accept the 5GN bid -- were anti-competitive and contravened section 606.
 
Section 606 prohibits the acquisition of a relevant interest in voting shares if, because of that transaction, a person's voting power in the company: Increases from under 20% to over 20% or increases from a starting point that is above 20% and below 90%.

The dance to sell WebCentral first commenced in July, when Siris Capital Group's Web.com offered Webcentral AU$0.10 per share, approximately AU$12 million, to wholly acquire what was left of the company.

5GN then raised its paddle to create a bidding war, offering AU$0.177 per share in early September for a deal valued at around AU$21.6 million.

Web.com upped its offer a week later to AU$0.155 per share, with the AU$18.9 million total to be paid in cash. Web.com a day later revised its proposal to AU$0.18 per Webcentral share.

But opportunity trumped cash, with Webcentral's board determining the 5GN proposal was superior to the one made by Web.com.

"The Webcentral board has determined that neither the Web.com counterproposal nor the revised Web.com proposal … would provide an equivalent or superior outcome for Webcentral shareholders as a whole compared with the 5GN proposal," the company told shareholders at the time.

Under the terms of the 5GN offer, Webcentral shareholders are offered one 5GN share for every 12 Webcentral shares. Based on there being just over 122 million shares on issue, the sale price sits at around AU$19 million.

Arq Group sold its name in February, alongside the company's enterprise services division for a total of AU$35 million. The sale of its enterprise business left the company with only its SMB division, which was then known as Webcentral, following the company's annual general meeting in May.

HERE'S MORE

• Australian Takeovers Panel gets involved with 5GN's Webcentral acquisition
  
• 5G Networks to proceed with Webcentral Group takeover
• Arq Group rebrands again, remaining business emerges as Webcentral Group
  
• Melbourne IT rebrands as Arq Group in the name of digital transformation
• Arq Group finds AU$35m Enterprise Division buyer to help reduce debt
• Web.com's revised bid lucks out to 5G Networks for Arq Group leftovers
• New York private equity firm scoops up Arq Group leftovers for AU$12m
• 5G Networks trumps Siris Capital offer for Arq Group leftovers
• Web.com ups Arq Group leftovers bid to just shy of AU$19 million in cash