Vocus takes 10% stake in rival Amcom for combination proposal

Vocus Communications has taken a 10 percent stake in Amcom Telecommunications Limited, along with a conditional proposal that could see a combination of the rival businesses.

Australian-listed Amcom Telecommunications is considering a conditional proposal put forward by fellow Australian Securities Exchange (ASX)-listed telco Vocus Communications, after it claimed a 10 percent stake in Amcom.

Vocus told its shareholders on October 27 that it had taken a 10 percent interest in Amcom, and had approached the rival telco with the "aim of arriving at an agreement under which Amcom's board of directors would recommend a combination of the businesses, with Amcom's shareholders receiving Vocus script for their shares in Amcom".

However, Vocus also said that the approach was subject to satisfactory due diligence, resolution of any change of control issues, and other conditions.

"The assets and operations of Vocus and Amcom are highly complementary, and the potential combination offers an enhanced growth platform, while creating a truly national player to capitalise on the evolving opportunities in the telecommunications sector," said Vocus chief executive officer James Spenceley in a statement (PDF).

"The proposal scrip consideration represents an attractive opportunity for Amcom shareholders to share in the ongoing growth of the high-quality businesses and the favourable industry positioning of the combined entity," he said.

Amcom said in a statement (PDF) to shareholders that it received a letter on October 24 from Vocus, confirming that it had acquired a 10 percent interest in the company, with Vocus also outlining a "confidential, conditional, incomplete, and non-binding proposal" for Amcom.

"The terms of the proposal remain confidential, and Amcom and its advisers are seeking further clarification from Vocus of key terms to determine whether or not there is a basis to progress the proposal," Amcom said. "To assess the proposal, a board committee has been formed. There is no certainty that these discussions will result in a transaction."

With Vocus claiming a market capitalisation of AU$556 million, and Amcom possessing a market value of AU$495 million, a potential combined entity resulting from the proposed future tie-up could be worth over AU$1 billion.

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