WorldCom may bid for AAPT-ABN AMRO
Reuters Story - May 26, 1999 01:31
By Daniel Morrissey
SYDNEY, May 26 (Reuters) - Speculation is mounting that U.S. telephone company MCI WorldCom Inc could bid well above A$6 a share for takeover target AAPT Ltd , according to a report by European investment bank ABN-AMRO.
The report, prepared by the bank's Australian analyst Ian Martin and published on Tuesday, said that while AAPT shares were not worth A$6 each to any telecommunications carrier, Australia's third largest carrier had modest value for MCI WorldCom.
As well, AAPT could serve as an expansion base.
"MCI WorldCom may bid well over A$6 per share for AAPT, capitalising the entire company around A$2 billion," it said. "It's stretched but it could work the customer base further."
A source close to MCI told Reuters last week that the U.S. company was keen on a merger with AAPT.
Cable & Wireless Optus Ltd launched a A$1.5 billion or A$5 per share takeover bid on April 16, which has been rejected by AAPT as inadequate.
Last week, Telecom New Zealand acquired 9.9 percent of AAPT and is reportedly arranging A$2 billion in bank credit lines.
The Australian Competition and Consumer Commission (ACCC) has been conducting an inquiry into the implications of an Optus takeover and plans to release its report before May 31.
The ABN-AMRO report said that a MCI WorldCom bid made more sense than a full offer by Telecom New Zealand.
"Certainly it makes more valuation sense than a full bid by Telecom NZ which has no infrastructure here and so little opportunity to improve the margin or hold revenue in the face of growing carrier competition," it said.
But the report added that while AAPT had some of the central business district optical fibre cable MCI WorldCom wanted and many data nodes, much of AAPT's business and assets would be "superfluous" and "may be disposed of" if it took control.
It said that MCI WorldCom's Asian-Pacific strategy was to expand its presence as deregulation occurred in the region.
"The strategy may be reflected in a bid to expand rapidly in Australia; relatively rapid deregulation may encourage a bid for AAPT which has pushed access regulation the most," it said.
On May 17, MCI WorldCom's Australian unit managing director Susanne Campbell, when asked if it was interested in acquiring a stake in AAPT, told Reuters: "I can't answer yes or no."
At 2:40 p.m. (0440 GMT), AAPT shares were seven cents lower at A$5.73 while Optus shares were down four cents at A$3.03. |
