Recent moves by Connect Holdings to acquire a controlling stake in Asian telco-independent internet communications service provider Pacific Internet (PacNet) could spark a bidding war for the company, writes Channel NewsAsia.
TeleGeography’s CommsUpdate reported yesterday that Vantage Corp had announced the sale of 2.25 million shares in NASDAQ-listed PacNet to Connect Holdings for a total consideration of USD22.5 million, subject to regulatory approval. However, Connect Holdings’ attempt to buy a controlling stake in PacNet could spur the target’s other main shareholder, MediaRing, to launch a counter offer. MediaRing launched an unsolicited bid for PacNet in February 2006 and raised its offer from USD8.25 per share to USD9.50 after its initial bid was rejected. The PacNet board advised investors with a short-term view to accept MediaRing’s offer, but said longer-term shareholders should reject the bid. At the time Vantage Corp, then PacNet’s single largest shareholder, said that its board had also decided to reject MediaRing’s revised offer. On 11 July 2006 MediaRing confirmed that it had failed in its bid to acquire PacNet, securing 33.8% of acceptances from PacNet shareholders, well short of the 50% figure needed, by the close of the offer deadline.
Under existing Singaporean rules, MediaRing would have to wait until July 2007 to make another bid, but if Connect Holdings launches a takeover bid, MediaRing would be free to make another offer sooner and this could result in a bidding war for PacNet. With its hand on a 42% shareholding, Connect needs just another 8% to cross the 50% level for a majority stake. Vantage meanwhile holds 28.6% of the company.