AUCyber has received a new acquisition proposal from Interactive Pty Ltd but maintains its recommendation for shareholders to accept 5GN’s revised and unconditional offer.
- Interactive Pty Ltd submits a non-binding, conditional $0.165 per share proposal
- AUCyber Board deems Interactive’s offer inferior to 5GN’s $0.135 final bid
- 5GN’s revised offer declared last and final, closing 6 February 2025
- Interactive’s scheme of arrangement seen as complex, lengthy, and uncertain
- Board unanimously recommends acceptance of 5GN’s offer absent a superior proposal
Context of the Acquisition Battle
AUCyber Limited (ASX: CYB), a prominent Australian cyber security and sovereign cloud services provider, has found itself at the center of a takeover tussle. On 30 January 2025, the company disclosed receipt of a confidential, non-binding proposal from Interactive Pty Ltd, offering 16.5 cents per share for 100% ownership via a scheme of arrangement. This offer, while nominally higher than the existing bid, comes with significant caveats.
The AUCyber Board swiftly responded with a second supplementary target’s statement, reaffirming its unanimous recommendation that shareholders accept the revised offer from 5GN Networks Limited, which stands at 13.5 cents per share. The Board’s stance is clear: despite the apparent premium from Interactive, 5GN’s offer is superior in terms of certainty, structure, and immediacy.
Why the Board Prefers 5GN’s Offer
The Board’s detailed analysis highlights several reasons for rejecting Interactive’s proposal as a superior alternative. Firstly, Interactive’s offer is expressly non-binding and highly conditional, lacking the immediate acceptability of 5GN’s unconditional on-market bid. This means shareholders cannot confidently rely on Interactive’s proposal materializing into a completed transaction.
Secondly, Interactive’s preferred acquisition method, a scheme of arrangement, introduces complexity and delay. This process requires multiple shareholder approvals, including a majority of shareholders present and at least 75% of votes cast, a challenging hurdle given 5GN’s existing 21.43% stake. The drawn-out timetable and associated costs could strain AUCyber’s financial stability, especially as the company faces the prospect of restructuring and potential equity raising.
Thirdly, Interactive has yet to commence due diligence, and the proposal is subject to extensive conditions, some within Interactive’s control. This uncertainty contrasts sharply with 5GN’s firm, unconditional offer, which is scheduled to close on 6 February 2025 unless extended under the Corporations Act.
Implications for Shareholders and the Market
The Board’s recommendation carries weight, with all directors intending to accept 5GN’s offer for shares they hold or control, barring a superior proposal emerging. For shareholders, this signals a clear path forward amid competing bids. The finality of 5GN’s offer, declared last and final, places pressure on Interactive to either firm up its proposal or withdraw.
From a market perspective, the situation underscores the challenges in acquiring a company with strategic government and enterprise contracts, where certainty and speed are paramount. AUCyber’s position as a sovereign cloud and cyber security provider adds layers of complexity to any takeover attempt, making the Board’s cautious approach understandable.
Looking Ahead
As the offer period approaches its close, attention will focus on shareholder acceptance levels of 5GN’s bid and whether Interactive can pivot from a non-binding proposal to a credible, binding offer. The Board remains open to genuine third-party proposals that can demonstrate superior value and certainty, but the clock is ticking.
Bottom Line?
With 5GN’s final offer looming, AUCyber shareholders face a decisive moment amid competing bids and strategic uncertainty.
Questions in the middle?
- Will Interactive Pty Ltd convert its non-binding proposal into a binding offer before the deadline?
- How will shareholder acceptance rates of 5GN’s offer influence potential extensions or counterbids?
- What are the longer-term implications for AUCyber’s financial stability if the scheme of arrangement proceeds?