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Seven Goes Straight For Unwired |
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Written by Adam Gosling
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Thursday, 27 September 2007 |
Wireless broadband provider Unwired has lifted its trading halt after announcing that Kerry Stokes' Seven Network has made an off-market offer for the company.
Seven, which in the past month has invested about A$20 million in the wireless carrier using pure play VoIP service provider Engin as an investment vehicle.
The offer is woefully low and unlikely to make much of an impression on the company that owns the spectrum licences for the next big wireless broadband technology WiMAX.
The Directors of Unwired (other than Mr Chris North who has excused himself) intend to unanimously recommend that Unwired shareholders accept the offer in the absence of a superior proposal. The company's share price has not been above 40 cents for most of the past year, but Seven's recent interest in the company has pushed it to as high as 51 cents today. However at lunch time less than a million shares had changed hands.
Unwired directors issued a statement saying it "welcomes Seven's interest in the company, recognising the substantial premium to recent trading prices implied by the offer. The directors look forward to receiving Seven's Bidder's Statement and to maximising the outcome for all shareholders".
However, Seven's offer price will increase to 50 cents cash per share if Seven can gain the magic compulsory acquisition figure of 90% of the shares of Unwired by a specified date not earlier than 8 November 2007.
Whether this carrot and stick offer will appeal to shareholders will depend on who owns how much of Unwired and whether they expect another bidder to be forced into the open.
The 45 cent offer price represents a 58 per cent premium over Unwired's share price for the past month ending 31st of August, 2007. This is the last trading day before Engin made its first move on the carrier. A buy price of 50 cents would represent a 76 per cent premium in the company's weighted average for the three months ending August 2007.
Unwired's control of the key metropolitan WiMAX spectrum puts it in a prime position for future service delivery, but the company does not have the capital backing to roll-out a network capable of taking Telstra's Next G network head on, despite having a superior technology in terms of bandwidth and efficiency.
Optus Communications, or its regional broadband joint venture OPEL, would have significant synergies with Unwired as it has committed to build a WiMAX infrastructure in regional and rural Australia under the Connect Australia funding recently finalised with the Federal Government.
OPEL has been criticised for the plan, which intends to use unlicensed spectrum for its regional WiMAX network. The preferred WiMAX spectrum in regional Australia is controlled by pay TV player Austar, not by Unwired.
Seven Network is all cashed up since selling half of the business to U.S. private equity firm Kohlberg Kravis Roberts in 2006. This year it has begun to make acquisitions that bring together a triple play strategy with a 34 per cent investment in voice provider Engin and more recently the near 20 per cent investment in Unwired.
Unwired shareholders will receive full details of the offer in Seven's Bidder's Statement and Unwired's Target's Statement which will each be mailed to Unwired shareholders shortly. Gresham Partners and Clayton Utz are advising Unwired.
Read more background on the Seven Network investment in Engin and Unwired or search VoIP News for more background on Engin. You can read more about Unwired on our sister site,
">moblised.
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