Volante has thumbed its nose at a takeover offer from Commander and is digging in for the first major IT takeover battle of 2006.
Company chairman, Robin Crawford, described the initial offer of $129.7 million - or $1.01 per share - as "absurdly low", suggesting it ignored a "substantial strategic benefit" that would be brought to Commander in the IT services sector if ever successful.
"The bid cannot be taken seriously and the Volante directors are unanimous in rejecting this low-ball offer," he said. "In fact, I and Volante's managing director, Ian Penman, have been recently acquiring stock. My interest in the company now stands at just under 4 per cent."
In response to Volante's stance on the takeover, Commander managing director, Adrian Coote, has expressed frustration.
"Volante's decision to reject the Commander offer denies its shareholders a fair cash price and certainty at a time when the company's future is uncertain," he said.
"If Volante's directors believe Commander's offer is not fair, then they should immediately provide their shareholders with a comprehensive update on the operational and financial performance of the business."
Coote said Volante's decision to recommend shareholders reject the $1.01 cash offer may condemn the stock to pre-offer share prices.
Volante, however, objects to Commander's use of a November earnings downgrade in justification of the share offer, despite trading at $0.67 at the time.
"It is disingenuous for Commander to latch on to Volante's announced earnings downgrade to justify its low-ball bid," Crawford said.
"The offer implies valuation multiples that are out of step with trading multiples for the IT services sector let alone transaction multiples."
Coote, meanwhile, maintains that the Commander offer represents a 25 per cent premium to the volume weighted average share price of Volante in the month prior to its announcement. With such overall reluctance for the takeover being vocalised by Volante, analysts are already pondering whether the marriage of the two businesses could actually work, even if the deal was completed.
"Volante doesn't seem too keen on the takeover," senior analyst at IDC, Phil Hassey, said. "And if it's going to be a long and drawn out process - look at Oracle and Siebel or HP and Compaq as examples - it could ultimately make the connection of the businesses quite difficult.
"Executives who have been commenting unfavourably on a company one week, could be working at that company the following week."
To further cloud the issue, Hassey said the arrival of a third party in the bidding was not out of the question.
"Volante's comments show that there's a large gap between its expectations and what Commander wants to pay for it," he said. "Some other businesses might want to have a nibble in the meantime.
"UXC wasn't the original buyer of [SAP services company], Oxygen, recently. Anything can happen."
Volante shareholders have until February 10 to reply to Commander's Bidder's Statement. Meanwhile, Volante is expected to issue a Target's Statement to shareholders during the next fortnight but has yet to set a date.