Dicker Data looks to have failed in an audacious bid to acquire ASX-listed distribution rival, Cellnet (ASX: CLT).
Managing director, David Dicker, has been negotiating since February with major shareholder, CVC Ltd, which holds more than 33 per cent of stock in the troubled Brisbane-based distributor. Dicker issued an absolute deadline for any deal to be done by close of business on June 6. That deadline had passed as this story went to press.
ARN understands CVC has engaged a broker to assess market opportunities for selling all or part of the Cellnet business, but it will not be proceeding with Dicker negotiations.
"They [Dicker] were speaking to CVC but those negotiations are finished," Cellnet managing director, Stephen Harrison, said. "I just don't think the synergy was there because they're two different types of business.
"There are no bad feelings - they [Dicker] thought there was an opportunity and we are a publicly listed company so we had to look at it."
Ironically, NSW-based Dicker was top of Cellnet's shopping list less than two years ago but discussions broke down because the two companies were unable to agree terms. At the time, in August 2006, Cellnet shares were trading for more than $1.10 but its market capitalisation has since gone though the floor. At the time of writing, shares were worth $0.32.
In a classic case of the hunter becoming the hunted, Dicker first flagged an interest in turning the tables on Cellnet in July last year. The vision was to engineer a reverse takeover that would have seen Dicker become a public company with projected annual revenues of more than $400 million.
The deal being discussed with CVC would have seen Cellnet issue additional shares to acquire Dicker, with Dicker shareholders - managing director, David, and ex-wife Fiona - owning 85 per cent of the merged entity.
The majority of Cellnet's vendor contracts would also have been ditched, according to Dicker, who was only keen to maintain relationships with IBM, Lenovo, Acer, Asus and Samsung. He estimated these contracts would generate about $150 million in annual revenues.
Dicker said Cellnet's telco distribution business, which recently announced it would suffer a revenue hit of $148 million following the loss of its contract with Telecom NZ, would have been spun off as part of the proposed merger.