5G Networks Boosts AUCyber Offer to 13.5 Cents, Board Recommends Acceptance

Context of the Revised Takeover Offer

AUCyber Limited (ASX: CYB), a prominent Australian cyber security and sovereign cloud services provider, has issued its First Supplementary Target's Statement following a significant increase in the takeover bid from 5G Networks Limited (ASX: 5GN). The revised offer now stands at 13.5 cents per share, a 22.7% uplift from the previous bid, reflecting a premium of 31.7% over the share price prior to the initial offer announcement.

This development comes after a competitive takeover environment, with a prior non-binding proposal from Brennan at 14 cents per share having been withdrawn. The AUCyber Board has responded decisively, unanimously recommending shareholders accept 5GN's enhanced offer in the absence of any superior proposals.

Board’s Strategic Recommendation and Shareholder Implications

The Board’s endorsement is notable given the company’s current financial challenges. AUCyber disclosed underperformance in the first half of FY25, with revenues across its core cyber security, cloud, and managed services falling short of expectations. Cash reserves stood at $5 million as of 31 December 2024, with a quarterly cash burn of approximately $1.8 million, underscoring the urgency for a stable capital injection or strategic restructure.

In this context, the Board highlights the certainty and immediacy of 5GN’s cash offer, which is unconditional and promises payment within two trading days post-acceptance. Shareholders are cautioned, however, that accepting the offer legally binds them to sell their shares and forfeits any rights to participate in potential future superior bids.

Financial Viability and Leadership Uncertainty

AUCyber’s financial outlook remains clouded by uncertainty. The company withdrew its FY25 guidance following disappointing early results and continues to evaluate cost optimization and revenue enhancement strategies. Compounding these challenges is the recent departure of CEO Peter Maloney, leaving a leadership vacuum at a critical juncture.

The Board acknowledges that without a restructure, new management, or equity injection, the company’s ongoing viability is not assured. This reality likely influenced the Board’s firm stance in recommending acceptance of 5GN’s final offer, which they have declared will not be increased further.

Next Steps for Shareholders and Market Impact

Shareholders have until 4:00pm Melbourne time on 6 February 2025 to accept the offer, unless extended under Corporations Act provisions triggered by 5GN acquiring a controlling stake. The Board’s recommendation and the withdrawal of competing bids may accelerate shareholder acceptance, potentially leading to a swift change in control.

For the market, this takeover saga highlights the challenges faced by mid-tier technology firms in sustaining growth and profitability amid competitive pressures and evolving cyber security demands. The outcome will be closely watched as a bellwether for consolidation trends within the Australian sovereign cloud and cyber security sectors.