The immediate future of integration and services company Techway appears uncertain, following moves by investment company Nova Pacific to mount a takeover bid for the company.
Nova Pacific has lodged an offer with the Australian Stock Exchange, which will enable it to buy any available Techway shares from January 27 until February 26. Nova Pacific's cash offer to shareholders is for 30 cents a share.
Techway managing director Jon Brett says his company now has until January 27 to make a recommendation to shareholders as to whether the offer is reasonable. In the interim he has already officially advised shareholders that Techway considers the offer to be too low.
Brett added that as the Techway board has at this time not rejected the offer, the bid is not considered hostile, although it may still be declared as such. Brett says the offer was not solicited by either the shareholders or the board, and came as a complete surprise.
Techway's vulnerability as a takeover target comes as a result of poorer than expected financial results. Indeed, late last year the company sold its Network Services division to AWA for $2.1 million, with an ongoing royalty stream estimated to be around about $500,000 per annum for the next three years.
Of the reason for selling to AWA, Brett says, "We believe that Network Services was better off in the hands of a bigger player. We had the ability to provide world class service, and we had staff of an incredible calibre, but clearly we didn't have the financial muscle to get all the business that we should have been getting.
"And this fits like a glove with AWA's business, because we had the expertise and capability in the wide area networks, and they have a service business but they don't have that (WAN) capability. They do have a lot of financial muscle, so we believed they could do more justice for the business than we could."
In some ways it appears to be a case of history repeating, as Techway sold most of its PC business to Protech in 1995 due to poor financial performance.