Joe Demase (5G Networks, Webcentral)
Webcentral’s proposed takeover of Cirrus Networks has entered a new, familiar chapter with the company planning to depose three quarters of its board and force a general meeting.
In late July, the recently merged IT services company announced its intentions to acquire Cirrus Networks Holdings for roughly $26.3 million, at 3.2 cents per share, with Cirrus telling its shareholders to reject the unsolicited offer.
Now, Webcentral is looking at removing three directors from Cirrus’ board — non-executive chairman Andrew Milner, non-executive director Daniel Rohr and managing director and CEO Matthew Sullivan.
This would leave Paul Everingham, who is currently a non-executive director of its board.
In their place, Webcentral proposes to appoint its own people to Cirrus’ board — managing director Joe Demase and general counsel and company secretary Michael Wilton.
As Webcentral currently holds at least 5 per cent of Cirrus shares — 8.86 per cent — it is able to force the company to hold a general meeting within the next two months under Cirrus’ constitution and the Corporations Act.
The move to take over Cirrus’ leadership during an acquisition attempt by way of stakeholding and a boardroom shuffle shows remarkable similarities to the steps 5G Networks took in its efforts to acquire Webcentral last year.
That acquisition saw Demase appointed as interim CEO, taking over from Brett Fenton, as it looked to acquire the IT provider.
Whether the move pays off for Demase this time, however, is yet to be determined.
The reasons behind Cirrus’ recent rejection of Webcentral’s $26.3 million takeover offer are based on the claims that it does not offer enough benefits and represented an “inadequate control premium”.
Cirrus' board claimed the offer prevents any benefits from any potentially higher offer in the future and will cause shareholders to miss out on its future growth.
In addition, Cirrus claimed the offer is a premium of only 3.2 per cent to the last closing price of shares of $0.031.
“The premium implied for the shares by the offer price is materially below the average premiums paid in Australian corporate control transactions,” Cirrus said.
