Amaysim sells mobile business to Optus

Amaysim CEO Peter O’Connell.

Amaysim Australia has agreed to sell its mobile business to long-term wholesale partner Optus Mobile in a $250 million deal that will lead to the delisting and winding up of the virtual network operator.

Amaysim said it had entered into a share sale agreement with the Singapore Telecommunications-owned firm, in a transaction which will see 67c to 73c per share distributed to shareholders once a deal is finalised.

The offer price is a 4.5 per cent premium to the closing price on October 29 at the mid point of 70c per share.

The Amaysim board has unanimously recommended shareholders accept the offer, which is expected to go to a vote at a special meeting in January.

It follows the August sale of Amaysim’s Click Energy business for $115m to AGL Energy.

The Optus offer came after Amaysim launched a strategic review and received a number of expressions of interest for the mobile business.

The Australian’s DataRoom revealed on July 22 that Optus was back circling the business after on again off again discussions over recent years.

At that time, there was talk in the market that Optus was in the data room conducting due diligence on the business for a potential acquisition.

The courtship between Amaysim and Optus has been long, with on-again, off-again discussions between both groups stretching back to at least 2016.

The talks were understood to have been reignited again in 2018 before ending.

Amaysim specialises in providing SIM-only mobile plans and has expanded into the home internet market.

It was founded in 2010 by the highly-regarded Australian telco expert Peter O’Connell, who took over the reins of the business more than two years ago as chief executive and remains a shareholder.

His focus had been removing costs from the business in what was thought to have been preparation for a sale.

Optus acts as a wholesaler to service provider Amaysim and buying the business is seen as logical to protect it from falling into the hands of its competitors ahead of its contract coming up for renewal next year.

The dilemma for Optus has been that Amaysim is a strong cash generator for the group and because it is responsible for much of its subscriber growth, it can’t let it fail.

But typically, Optus is not a keen buyer of assets.

It was earlier thought that the $13bn merger between TPG Telecom and Vodafone Hutchison Australia two years ago could prompt groups such as Optus, which is the country’s second-largest telecommunications provider, to look at opportunities to bulk up.

Luminis Partners is working for Amaysim and Optus is advised by Bank of America.

Amaysim’s market value has rallied since April on the back of the global COVID-19 pandemic.

However, shares are down from their 2016 highs of $2.65, on Friday closing at 67c.

Private equity firm Adamantem has previously run the ruler over Amaysim with adviser Gresham on hand.

James Spenceley was eager for the company that he co-founded, Vocus, to buy Amaysim when he was on the board about two years ago, but former Vocus managing director Geoff Horth was against the idea.

Amaysim estimates that following the mobile sale between $207.2m to $225.7m will be distributed to shareholders, including the Click Energy proceeds.

As part of the latest deal, additional value from franking credits up to about 11c per share are expected to be attached to different components of the distribution.

Shareholders are due to vote on the sale in January and the board has recommended the transaction.

“We believe Optus, with its deep knowledge of our operations, is well placed to look after our customers and staff and take the growth of the business to the next level,” said Mr O’Connell, its CEO.

“Since listing on the ASX in 2015, we have achieved healthy organic growth complemented by successful strategic acquisitions of Vaya, Jeenee and OVO’s customers.”

Chairman Andrew Reitzer said the sale of Amaysim to Optus represented a premium to its current share price and provided certainty for shareholders in a highly challenging and dynamic market.

“The Amaysim board unanimously supports the offer and believes Amaysim’s mobile business will be best positioned to succeed in the future through the proposed transaction given the investment required to remain competitive.”

He said Optus was a long-term strategic wholesale partner with a deep understanding of the business, having provided wholesale network services since Amaysim was founded in 2010 and this transaction brings closer alignment and strategic benefits.