Telco services provider 5G Networks has formalised its bid to acquire ASX-listed web hosting company Webcentral through a non-binding indicative proposal.
The proposal comes after the completion of 5GN’s $30 million placement it announced last week to help potentially finance the acquisition of Webcentral.
The proposal includes a number of conditions, like having the transaction done as an off-market takeover bid, with a consideration of 1 5GN share for every 12 Webcentral shares, and 5GN providing Webcentral a loan to pay its outstanding debts. The deal would value Webcentral at $21.6 million, or 17 cents per share.
In an ASX announcement, Webcentral said its board has deemed 5GN’s proposal to be superior to the offer of US-based Web.com, which was valued at $12 million or 10 cents per share.
“The Webcentral board has determined that the 5G Networks proposal is a superior proposal and accordingly has commenced the matching right process outlined in the scheme implementation deed between Web.com and Webcentral,” the announcement read.
The company said Web.com has five business days to match or beat 5G Networks’ offer, and advises its shareholders not to take any action as both offers are not guaranteed to proceed.
“In light of the above, no Webcentral board member recommends, supports or endorses the 5G Networks proposal at this stage and the Webcentral board continues to unanimously recommend that shareholders vote in favour of the [Web.com proposal] at the scheme meeting,” the announcement read.
5G Networks currently has a 10.2 percent “strategic interest” in Webcentral, which it acquired from Merchant Funds Management. Another major shareholder Keybridge Capital, which holds 9.24 percent has told Webcentral it “presently intends” to vote against the Web.com proposal.