ASX-listed Webcentral is looking to completely overhaul the board of directors of Cirrus Networks as part of its planned takeover of the Perth-based MSP.
Webcentral is seeking to remove all but one of Cirrus’ directors, including managing director Matt Sullivan, and replace them with some of its executives. The only existing board member to be retained will be non-executive Paul Everingham.
The hosting provider and telco services company wants to install its CEO, Joe Demase, and company general counsel and secretary Michael Wilton to Cirrus’ board to replace Sullivan, board chairman Andrew Miller and non-executive director Daniel Rohr.
The takeover bid was first announced in late July, with Webcentral looking to buy out Cirrus and all its ASX shares for 3.2 cents each or a total of $26 million. Cirrus is urging its shareholders to reject the proposal.
In comparison, Cirrus currently trades at 3.4 cents per share and has gone as high as 4 cents per share last week. Webcentral also holds 8.86 percent of Cirrus Networks' shares.
The announcement comes as Webcentral has served Cirrus with a notice to have the latter’s directors call and arrange a general meeting within 21 days, and hold it within two months.
Cirrus Networks remains steadfast in its advice to shareholders to reject Webcentral’s takeover attempt, releasing a 59-page statement last week explaining why the offer is not adequate.
[Cirrus Networks] directors believe the [Webcentral] offer represents an inadequate control premium. If you accept the offer or sell your shares on market, you risk missing out on the benefit of any higher offer that may arise from Webcentral or any other third party in the future,” Cirrus told shareholders.
“If you accept the offer you will not benefit from Cirrus' future growth; your directors do not believe Webcentral is offering enough for the benefits it may receive; and the directors and key members of management do not intend to accept the offer.”
Cirrus added that it believes that the company remains “very well placed” for organic growth through a focus on improved earnings from revenues generated by higher margin services contracts and disciplined overhead cost controls.
“Your directors also reiterate the unsolicited nature of Webcentral’s Offer, which was made without any prior engagement with Cirrus’ board,” the company said.