AC3 has edged a step closer to acquiring cloud specialist, Bulletproof (ASX:BPF), after entering into a scheme implementation deed to wholly acquire the business.
The official proposal comes less than a month after the Sydney-based provider tabled a $24.7 million bid, at a cash price of 15.2 cents per issued share.
Subject to Bulletproof shareholder and court approvals, the scheme looks set to position AC3 as the lead bidder in the process, ahead of a $17.9 million bid issued by Macquarie Cloud Services -- a subsidiary of Macquarie Telecom Group -- on 21 November.
“We believe that the two businesses complement each other extremely well and together would add incredible value to our customers,” AC3 CEO, Simon Xistouris, said.
“We look forward to finalising the deal to bring some certainty for all those involved and focus on what is really important – people.
“We believe that it’s the people behind the technology that makes the real difference. I’m confident that the acquisition will be very attractive to our staff and to the staff of Bulletproof given the capabilities and strengths of the combined group.”
In a statement issued to Bulletproof shareholders on 15 February, Bulletproof chairman, Craig Farrow, welcomed the agreement, suggesting it provided "materially better value than the takeover offer announced by Macquarie Telecom Group.
"I'm confident that the combination of AC3 and Bulletproof should also be highly attractive to both our employees and customers given the capabilities and strength of a combined AC3 and Bulletproof group," he said.
Macquarie Cloud Services
The agreement comes as rival bidder, Macquarie, continues to fight for a seat at the negotiating table less than three months after making an official offer.
In documents released via the Australian Stock Exchange (ASX) on February 14, Macquarie questioned the “misleading and/or deceptive” nature of Bulletproof’s target statement, published on 22 December.
As reported by ARN, Bulletproof shareholders were advised to knock back the proposed $17.9 million takeover deal which was first flagged in November.
Under the heading of “what they haven’t told you”, Macquarie said in a statement to shareholders issued on 14 February that the independent board committee charged with reviewing the offer “has not unanimously rejected the offer”, claiming the target statement reflects the views of “only two of the three” Bulletproof directors.
“The contrary views of the co-founder, executive director and largest Bulletproof shareholder, Mr Anthony Woodward, have been omitted,” a statement read.
“Mr Woodward has agreed to accept the offer under a pre-bid agreement but his reasons for doing so were deliberately excluded from the target’s statement.
“Bulletproof shareholders are entitled to this information and they should demand that Bulletproof provide this information to them.”
In response to alleged accusations that the original offer was “opportunistic”, Macquarie said an original bid was made following a decision by the Bulletproof board to put the company up for sale in early 2017, as a result of its “deteriorating financial performance”.
“As part of this process, Macquarie Telecom and a number of other companies were invited by Bulletproof’s chairman, Mr Farrow, to conduct due diligence and consider submitting an offer to buy Bulletproof,” a statement read.
It should be noted that Bulletproof established an independent sub-committee of the board to decide on Macquarie's offer, due to Macquarie Cloud Services' pre-existing stake in a "relevant" interest of around 16.47 per cent of voting shares in Bulletproof through an entity affiliated with Bulletproof's CEO, Anthony Woodward.
The creation of this sub-committee effectively saw Woodward removed from the board-level decision-making process regarding the Macquarie offer.
First revealed by ARN, AC3 has headed up the bidding war for the ASX-listed provider since 22 January, with the potential deal forming a key part of the company’s growth plans in 2018.
“We have a clear growth strategy at AC3 that encompasses organic growth as well as acquisition," Xistouris told ARN at the time.
"Acquisition has been a key part of our growth strategy in recent years, with the acquisition of AC3 from the NSW Government in 2013 and it continues to play an important role in the expansion of our business.
"We are always looking for options that will complement our existing business and add further value for our customers.”
Expansion plans come almost four years since Klikon Solutions acquired all the shares in NSW government-owned AC3, for an undisclosed sum in December 2013.
Established in 1998, AC3 was the primary site for High Performance Computing within New South Wales (NSW).
A rebrand to AC3 soon followed post-merger, with the combined business specialising in cloud, software, managed services, procurement, professional services and talent management.
From a customer perspective, AC3 operates across both private and public sectors, working across a range of verticals nationwide.
As a registered supplier within the ICT Services Scheme, all NSW government agencies can purchase from AC3, with the provider operating as one of the anchor tenants in the two purpose built government data centres at Silverwater and Unanderra that are the GovDC.