The Australian Takeovers Panel has given 5G Networks the greenlight to acquire Webcentral Group after declining to pursue external claims of the former's “coercive” activity towards shareholders.
The claims, made last week by financial services firm Keybridge Capital, flagged several issues with the publicly-listed data infrastructure and network services provider's proposed acquisition.
These alleged issues were focused on 5G Networks’ bidder's statement and Webcentral's target's statement in relation to the 5G Networks Conditional Funding, with Keybridge claiming it created "a highly coercive effect on shareholders to accept the [5G Networks] bid, to cause control to pass in a manner inconsistent with that of an efficient, competitive and informed market".
Keybridge also claimed the statements made by the Webcentral directors — that they would accept the 5G Networks bid — were anti-competitive and contravened section 606 of the Corporations Act 2001.
However, 5G Networks told its shareholders in a statement to the Australian Securities Exchange (ASX) that the Takeovers Panel declined to conduct proceedings in relation to Keybridge’s application.
“As the Takeovers Panel declined to conduct proceedings, 5G Networks will now continue to process acceptances received under its takeover offer for Webcentral Group," the company noted.
The provider also now holds a relevant interest in 50.87 per cent of Webcentral shares, with its takeover offer now scheduled to close on 10 November.
In a separate statement, the Takeovers Panel said that it was not in the public interest to conduct proceedings against 5G Networks.
This conclusion was based on several different points, with the first being that any potential coercive effect of 5G Networks waving its bid conditions and leaving the 50 per cent acceptance condition on 5G Networks' loan offer was "partly remedied" with the provider waiving that 50 per cent condition.
The Panel also determined the directors waited before accepting the 5G Networks bid, allowing time for a superior proposal, and also was "generally reluctant to substitute the decision of target directors when there is little material to suggest any association between them and the bidder".
Additionally, if there were any remedies for the situation, the chance of an impact was believed by the Panel to be less likely due to the timing of the application.
Webcentral's financial situation, labelled as "constrained" by the Panel, also played a part, with it seeing its profits plummet by over 1,200 per cent last financial year.
The declined application comes days after 5G Networks boss Joe Demase’s took over Webcentral’s leadership ahead of its proposed acquisition, acting as its interim CEO in place of Brett Fenton.
Fenton took over from another interim CEO Tristan Sternson, who stepped in after former leader Martin Mercer exited what was then known as Arq Group in September 2019.
5GN was previously up against US company Web.com Group in its pursuit of Webcentral, as the latter raised its bid to $18.9 million last month. However, 5GN won the tussle with a higher offer of $21.6 million.