Aussie Broadband Limited

ASX:ABB

Aussie Broadband Limited

ASX:ABB
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$3.52 (-0.8%)
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#63
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15
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Reports (9) My Report Forum Investors
Forum Topics ABB ABB Follow up announcement

Pinned straw:
Ipsum
Added 9 months ago

Aussie Broadband have announced they are being directed to dispose of some of their interest in Superloop.

From the announcement:

Under the constitution of Superloop (Superloop Constitution), there are certain provisions regarding the acquisition of Superloop shares which derive from regulatory requirements relating to the Singapore Facilities-Based Operations (FBO) telecommunications licence held by Superloop’s Singapore-based subsidiary (Superloop Singapore). Specifically, the Superloop Constitution provides that a person must not, alone or together with their associates control, 12% or more but less than 30% or, 30% or more, of the voting power in Superloop without the prior written approval of the Info-communications Media Development Authority of Singapore (IMDA).

Superloop claim Aussie Broadband knew full well about this requirement, since their prior acquisition of Symbio would have involved dealing with the Singaporean IMDA. Aussie Broadband claim their failure to comply was 'inadvertent'.

Inadvertent is an interesting word to use. They can't claim `unaware` since they clearly should have been aware.

Either they overlooked this requirement, which suggests poor strategy, or they were aware and figured it was better to beg forgiveness than ask permission. I'm inclined to believe it was the latter.

I'm uncertain how to proceed here. The prior acquisitions have been successful but I didn't buy ABB expecting a series of acquisitions. I'm not sure how to evaluate this (seemingly) aggressive approach to acquisitions. That's not a value judgement: it's probably a fine strategy for the appropriate company, just not my cup of tea.

In particular, I'm wondering:

  1. How important is this acquisition to ABB?
  2. If it was important, have they bungled it? Or was this a strategic manoeuvre beyond my view (ie. they must have known about the IMDA requirement) ?
  3. The price is continuing to drop, yet their holding in Superloop has appreciated. If the price looks good can I get comfortable with where management is headed?


Still thinking on this one.
RhinoInvestor
Added 9 months ago

Interesting development.

Looks like 4 or 5 major fundies all got out for ABB to buy its share (Challenger/Apollo Global Management, Lennox Capital Partners, Perrenial Value Management, Regal Partners).

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Interesting that SLC didn't immediately tell ABB to divest but was happy to string them along for 3 weeks. I'd have thought the onus would be on Superloop and they are the ones who are not following appropriate process. They should have told ABB this on 28 Feb when ABB acquired its holding. If I was the SGP government I'd be applying the majority of my scruitiny to SLC rather than ABB.

Drops the short term value of ABB's holding in SLC a bit but I don't think really has a meaningful long term impact on ABB. However, given they acquired their nearly 98m shares for around $0.95 ABB is still sitting on a short term gain of about 24% at today's SLC price. ABB's gain on their holding is about 22.5m and even if they have to sell down from 19.9% to 12% they would still make about 8.9m on the portion they are forced to sell.

My guess is that the risk of SGP government enforcing this would be relatively low so I'd expect both SLC and ABB share prices to rebound once this is resolved. (not confident enough to be buying either based on that guess though).

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