Race on for First State Super to complete OptiComm takeover

Uniti will receive a $5.4m break fee from OptiComm if it proceeds with another proposal.

A race against time is now on for First State Super to complete its due diligence on takeover target OptiComm, with the $90bn superannuation fund under pressure to put forward a binding bid in less than two weeks.

First State Super came forward with a $609m takeover bid for the internet service provider on Monday, trumping an earlier offer by Uniti Group.

However, the bid is not yet binding and subject to due diligence, which means it is not yet recommended by OptiComm’s board.

OptiComm had agreed to complete a scheme of arrangement with Uniti, which was offering $5.10 a share for the company, equating to $530m, or $540m of cash and scrip, factoring in a dividend payment.

However, First State is offering $5.85 a share cash, with the proposal lobbed with the company on Monday.

OptiComm has deferred the meeting to vote on the Uniti deal and First State has now been offered the opportunity to carry out due diligence on the company until September 18.

OptiComm has been asked to put forward a formal binding bid by September 18, and Uniti has the right to match the offer, but the jury is still out as to whether this occurs.

The new offer by First State comes after DataRoom reported on August 27 that another suitor was believed to be circling OptiComm. Spark Infrastructure was understood to have been eyeing OptiComm in recent weeks, but opted not to proceed with an acquisition.

OptiComm provides internet connection services to property developers and retail service providers and is considered “core-plus” infrastructure by some infrastructure funds.

The company is one of few in the telecommunications space that has caught the eye of a superannuation fund bidder, likely to have a cheaper cost of capital than a strategic player in the telco space.

It listed last year with a $208.2m market value, with shares being sold at $2 each. Existing founders, including director David Redfern and Paul Cross, still own about 40 per cent.

OptiComm and Uniti had both agreed on the takeover deal and shareholders were due to vote on the transaction on September 10.

The First State Super proposal carries a 12.5 per cent premium to the Uniti offer, which amounts to $5.20 a share, factoring in a 10c dividend.

OptiComm said in a statement to the market on Tuesday that it was appropriate for the board to engage in further discussion with the competing bidder on the basis that it may lead to a superior proposal.

Uniti will receive a $5.4m break fee from OptiComm if it proceeds with another proposal.

First State Super is advised by ICA Partners and law firm Allens.