24th Nov 2010. Big Air (ASX:BGL) has announced a bid for Clever Communications (ASX:CVA) (“Clever”). The board of Clever has recommended the bid, subject to no other bids materialising and the review of the Big Air bidders statement. The bid offers .35 Big Air shares plus 1.82 cents cash for every Cever share. The maximum cash component is $2.181m.
The $9.6 million scrip and cash deal comes two years after BigAir successfully fought off a takeover bid from Clever Communications, and values Clever Communications shares at 8.3c, about 18% higher than the shares were last trading. The major changes between then and now included Clever’s divestment of its off-net business to M2 Telecommunications and of its shareholding in BigAir earlier this year.
The offer price represents a premium of 25% on the closing price of Big Air shares the day before the announcement, an 18% premium to the VWAP of Clever shares in the 30 days before the announcement, and a 27% premium to the 60 day VWAP.
The chairman of BigAir, Paul Tyler, says the deal will create significant cost, revenue and capital-expenditure synergies. “The customers of both companies will benefit from the expanded network coverage and also the combined engineering and commercial strengths of the two organisations. This deal is part of our ongoing commitment to providing business broadband users with a compelling alternative to fixed line networks,” Tyler said in a statement to the ASX.
BigAir reported a 17% increase in revenue for 2009-10, up to $7.7 million, while net profit climbed 72% to $2.2 million. Clever Communications’ revenue fell 14% during the period to $12.2 million, with profit up 650% to $2.4 million
BigAir expects some rationalisation of core network and wireless infrastructure assets should its off-market takeover bid for Clever Communications be accepted. “They’re focused on fixed wireless, whereas before they had an off-net business as well,” said BigAir CEO Jason Ashton. “Now there’s no other distraction from their business.”
Ashton said BigAir would wait to see how its offer was received by shareholders before putting details around how a combined entity would look. He believed that the relative strengths of the companies – BigAir in NSW and Clever in Victoria – would lead a combined entity to be able to “better service customers located in these regions” as well as to expand network coverage.
In its bidders statement Big Air noted it was also in discussions with another potential acquisition, a business offering managed broadband services, with a purchase price that was likely to be material.
In a related move, BigAir has raised $2 million through a share placement to institutional investors. The company has placed 11.9 million new shares at $0.17 per share, an eight per cent discount to the five-day weighted average as of close of trading last Friday. BigAir said it will use the proceeds to enhance its working capital. Under the arrangement, BigAir will place 6.7 million new shares shortly, with the balance to be issued at the same price pending shareholder approval at a December meeting. BigAir plans to use the EGM to ask permission for its chairman and another board member to participate in the placement.
Baker & McKenzie has acted as legal advisers to Big Air.