Seven In Unwired Takeover Bid

Written by Adam Gosling

Thursday, 27 September 2007

Seven Network has moved quickly from making an initial investment in wireless broadband carrier, Unwired, after initially showing only a passing interest in a complete take over it has today announced it plans to make an off-market takeover offer to acquire 100% of the company's shares for 45 cents per share. 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, Seven's offer price will increase to 50 cents cash per share only if Seven achieves a relevant interest in at least 90% of the shares of Unwired by a specified date not earlier than 8 November 2007. This is designed to encourage shareholders to transact quickly if they are interested in accepting the Unwired Board's recommendation, but the deciding factor will probably come down to who owns how much of Unwired and whether they expect another bidder to be forced into the open. 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 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". 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. Go here for more background on the Seven Network investment in Engin and Unwired Related news items Tiny Rugged UMPC WIth Vista -10/10/2007 Consumers Want FMC: Companies Don't See The Benefit -02/10/2007 Nokia Buys Map Company For US$8 Billion -02/10/2007 Major Players To Test WiMAX Interoperability -26/09/2007 Ultra-Mobile Sales Ready To Rocket -16/09/2007 Newer news items Telstra Says CDMA Incentives Will End -22/01/2008 3 Doubles Broadband Allowance -15/01/2008 Seven Wins Unwired -03/12/2007 SingTel's Mobile Subscribers Up 57% -06/11/2007 Skype, 3 Team Up For Mobile VoIP -29/10/2007 Older news items Sydney Airport Network Improved For APEC -03/09/2007 Telstra Offers $3 Million To Get Seniors Hooked on SMS -15/08/2007 Telstra To Launch MVNO In NZ -12/08/2007 Now Every Kiwi Has A Mobile, What Next? -08/08/2007 IDC Paints Picture Of Fierce Mobile Competition -11/07/2007 Tag This Now: