IDT presses Net2Phone (hostile takeover)
(With the cebridge voip deployment, ntop's cable/telecom deployments will pass 3.2 million homes (which puts homes passed for ntop above Mediacom 2.8 million, Insight 2.3 million, Bright House 2.1 million -- the next leg up is Cablevision 4.4.
All but cablevision puerto rico (liberty media) started in 2005 or will start in 2005 -- i.e., atlantic broadband by the end of the year; mci and ntop are in a trial now; cebridge is in a trial now;
Liberty media sold its ntop share back to idt at the end of 2004 for approx. $4.50; the secondary to garner money for deployment went out at $4.50, when prior to that ntop had been trading at $8+)
IDT presses Net2Phone
by Chris Nolter
deal.com
Hostile Takeover
The telephone company is making an aggressive push to buy the Internet telephony business on the cheap.
thedeal.com
A day after receiving a letter of rebuke from lawyers for a Net2Phone Inc. special committee, IDT Corp. asked Friday, July 8, for a meeting with the group to hash out a buyout agreement.
The suitor, which is also Net2Phone's largest shareholder, has offered $1.70 per share, or about $130 million, for all of the equity. While the target has suffered in the last year, the bid by IDT and chief executive Howard Jonas is an effort to buy the company on the cheap.
"It is a very interesting deal," said Rick Black, an analyst at New York boutique Blaylock & Partners LP. "Essentially what IDT is doing is trying to take control of Net2Phone at a price that most people would think is at a discount to the ultimate value of the entity."
Lawyers for a Net2Phone committee expressed a similar sentiment on Thursday. In a letter to IDT's board, counsel at Kirkland & Ellis LLP said the offer is "not acceptable." IDT's attorneys at Kramer Levin Naftalis & Frankel LLP wrote back Friday, asking for a meeting and noting that the Newark telecom and media company is not interested in selling its shares to a third party. A meeting had not been immediately set.
The Newark, N.J.-based Internet telephony company was once a wholly owned subsidiary of IDT. The unit went public in 1999. The next year, IDT sold a 32% stake to AT&T Corp. of Bedminster, N.J., for $1.1 billion. In a complex 2000 transaction, John Malone's Liberty Media Corp. took a stake in the company, and shared control of Net2Phone in a consortium with IDT and AT&T. Since then, IDT has bought the shares of Liberty and AT&T while retaining nearly $1 billion in cash and marketable securities.
"They are fully aware of Net2Phone's circumstances," said Clayton Moran, an analyst with the Houston firm Stanford Group Co. A rival suitor is unlikely to feel as comfortable in putting a value on the company.
Further, if IDT will not sell its position, it is difficult to see why another bidder would want to buy into Net2Phone. "What good is it to buy the stock if you are now a 43% voting partner, even though you have the majority of the stock"? Black asked.
It is by no means unusual for IDT to play an aggressive hand. In early 2003, the company tried to break up the $250 million sale of Global Crossing Ltd. to Hutchison Whampoa Ltd. and Singapore Technologies Telemedia, by raising questions about national security. Though Hutchison backed out of the deal later because of regulatory scrutiny, ST Telemedia succeeded in the buyout.
Later that year, IDT made a hostile offer for ITXC Corp., an Internet telephony provider in Princeton, N.J. The target, however, eventually went to Cerberus Capital Management LP's Montreal telecom, Teleglobe International Holdings Ltd.
Net2Phone would be an opportunistic buy. The shares have traded as high as $4.16 in the last year but have steadily declined.
The company also has strategic value. Among its operations, Net2Phone provides Internet telephony services to cable companies, and Black said many of the smaller cable companies are potential customers.
"They need to be able to roll out a cable telephony solution," the analyst said. "The problem is, it's been a very slow process." |
