Optus Directors to Urge Shareholders to Approve SingTel's $8.9 Billion Bid
May 21, 2001 8:34 AM
Dow Jones Newswires
SYDNEY, Australia -- Directors of Australian telecommunications giant Cable & Wireless Optus Ltd. said Monday they would recommend that shareholders accept a takeover bid by Singapore Telecommunications Ltd., despite failed attempts to negotiate better terms.
The deal, originally valued at 17.2 billion Australian dollars (US$9.11 billion), will be Australia's second-largest corporate transaction if it goes ahead.
SingTel President and Chief Executive Officer Lee Hsien Yang announced in Sydney the release of SingTel's bidder's statement and offer, which is open to shareholders until July 3, for Australia's second-largest telephone company.
The bid gives Optus shareholders three offers for their shares: 1.66 SingTel shares for each Optus share; A$2.25 in cash and 0.8 of a SingTel share for each Optus share; or A$2 in cash, 45 Australian cents worth of SingTel bonds and one unsecured note redeemable for 0.54 of a SingTel share.
"Optus shareholders who accept our offer and receive SingTel shares will have a unique opportunity to participate in a leading Asia-Pacific integrated communications service provider, with diverse, stable revenue streams and attractive growth prospects," Mr. Lee said.
Mr. Lee said SingTel would maintain the Optus name and branding in Australia, and offer SingTel board seats to Australians. Optus staff levels would be maintained or increased in keeping with Optus' reputation as a growth business, he said.
Optus' independent directors said they have recommended to shareholders that they accept SingTel's offer, despite a decision by independent experts that the offer was "not fair but reasonable."
The evaluation was partly due to SingTel's share price being undervalued, independent expert Grant Samuel & Associates said.
The original offer valued Optus at A$17.2 billion, but the valuation has since fallen to around A$14 billion because the bid is contingent on SingTel's share price, which has dropped around 30% since the offer was announced.
"We have sought to negotiate from SingTel a better deal for shareholders on a number of occasions. We have not been successful in this regard, and do not believe that a better offer will be made at the present time," Optus directors said.
SingTel's bid for Optus is still subject to approval by the Australian government's Foreign Investment Review Board. SingTel is 78%-owned by the Singapore government, which has caused some concern in Canberra, since completion of the deal would give SingTel access to satellites that carry sensitive Australian military data alongside telephone traffic.
SingTel Chairman Koh Boon Hwee said in Singapore Monday that there was still no word from the Australian regulators. SingTel doesn't know when the regulators will make a decision, Mr. Koh said.
Meanwhile, SingTel said it has decided not to bid for its local rival MobileOne (Asia) Pte. Ltd. MobileOne's major shareholders, Keppel Transportation & Telecommunications Ltd. and Singapore Press Holdings Ltd., each plans to sell its 35% stake in the carrier. The remaining 30% is jointly held by Britain's Cable & Wireless PLC and Hong Kong's Pacific Century CyberWorks Ltd.
In a statement, SingTel said it was unable to obtain a copy of the bid document from MobileOne regarding the stake sale.
Earlier this month, SingTel's Mr. Lee said despite SingTel's interest in MobileOne, anticompetition regulations might prevent a transaction from going forward.
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