The Australian Takeovers Panel has received an application from investment and financial services firm Keybridge Capital in relation to the pending takeover of Webcentral Group by 5G Networks (5GN).
Webcentral Group, the remnants of Arq Group that was formerly the company known as Melbourne IT, announced last week it was moving forward with the 5GN takeover.
Webcentral said that each of its directors, who collectively have a relevant interest in approximately 19% of the total number of Webcentral shares on issue, had taken the necessary steps to accept the takeover offer.
As a result of those and other acceptances received under its offer, 5GN then assumed a relevant interest in approximately 34.75% of the shares in Webcentral.
"The Webcentral directors unanimously recommend that Webcentral shareholders accept the offer, in the absence of a superior proposal," the company wrote at the time.
The offer was classed as wholly unconditional and was scheduled to close at 7pm AEDT on 27 October 2020.
But in Keybridge's application, it has flagged various issues with the takeover. It said that disclosures in 5G Networks' bidder's statement and Webcentral's target's statement in relation to the 5G Networks Conditional Funding "create a highly coercive effect on shareholders to accept the [5G Networks] 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 5G Networks bid -- were anti-competitive and contravened section 606 of the Corporations Act 2001 .
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%.
Also of concern to Keybridge is that disclosure in Webcentral's target's statement is unclear, "in particular in relation to why Webcentral has formed the view that the 5G Networks bid was superior to the Web.com proposal".
Keybridge is currently seeking interim orders for 5GN to not process any acceptances until such time as the Takeovers Panel has considered its application and that 5GN has extended its bid by three weeks.
Keybridge has 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for final orders that provide Webcentral shareholders with withdrawal rights under the 5GN bid -- unless the bid is withdrawn -- and for all shares acquired in contravention of s606 to be vested in ASIC for sale and further disclosure.
The Takeovers Panel said a sitting panel has not been appointed at this stage and no decision has been made whether to conduct proceedings.
"While the directors of 5GN consider that Keybridge's Takeovers Panel Application is wholly without merit, pursuant to the Takeover Panel's Rules 5GN is unable to discuss Keybridge's Takeovers Panel Application further at this stage," 5GN said in a statement to the ASX on Thursday.
In July, 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.
5G Networks then raised its paddle, bidding 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 the 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.