Vocus Communications Limited (ASX: VOC) has reportedly sold its entire 10% stake in rival telco Amcom Telecommunications Limited (ASX: AMM) in a last-ditch effort to get their $1.2 billion merger deal over the line.
Until recently, a merger between the two entities seemed to be set in stone whereby Vocus would acquire the outstanding 90% of shares it didn't already own in Amcom. But in a move nobody expected, TPG Telecom Ltd (ASX: TPM) strategically increased its own stake in Amcom to 18.6%-19.99% of outstanding shares, with the intention of using its stock to vote against the merger.
Given that Vocus would not have been allowed to use its own shares to influence the vote, it is estimated that more than 86% of shareholders would need to vote in favour of the transaction – a tough ask considering voting is not mandatory.
Although the odds are still against the proposal being passed, it seems that Vocus may have made a favourable result more likely overnight. According to reports from the Fairfax press, the company has sold down its 10% stake in the business to allow other investors the chance to vote in favour of the scheme, greatly improving the likelihood of success.
While the deal is said to have attracted strong support from retail and institutional investors alike, a merger between Vocus and Amcom certainly appears to be in the best interests of shareholders.
Indeed, the two businesses have natural synergies with the Perth-based Amcom dominating in the west while the Sydney-based Vocus has a strong presence along the east-coast. The combined entity would boast strong growth potential in a deal that all shareholders from both parties could enjoy in the long run.
While the Scheme Meeting has been scheduled for 18 May, it could be delayed yet again as a result of the latest development overnight. If the meeting does go ahead as planned however, investors wanting to lodge a proxy vote for (or against) the deal will need to do so by 11:00 am (Perth time) today, while the Scheme Meeting will be held at 11:00am (Perth time) on Monday 18 May at the Perth Convention Exhibition Centre.
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