ASX Announcement
Webcentral Group Limited (ASX: WGC) (Webcentral) announced on Friday, 30 July 2021 an unsolicited on- market takeover bid to acquire the shares in Cirrus Networks Holdings Limited (ASX: CNW) (Cirrus) that it does not already own, at a price of $0.032 per share (Offer Price) (the Offer). Webcentral also announced that it has recently acquired and now owns shares in Cirrus representing 8.86% of the fully paid ordinary shares on issue.
Following consideration of the terms of the Offer with its advisers, the Cirrus’ Board Unanimously recommends that Cirrus shareholders REJECT the Webcentral Offer by taking no action.
The reasons Cirrus directors unanimously recommend you REJECT the inadequate Webcentral Offer include:
- Inadequate control premium: Webcentral is seeking to gain control of Cirrus without paying an adequate control premium and is offering a derisory premium of only 3.2% to the last closing price of Cirrus shares of $0.031 and a premium of 11.77% and 9.93% to the one month and three-month Volume Weighted Average Price (VWAP) of Cirrus Shares, being $0.0286 and $0.0291 respectively, up to the trading day prior to the announcement of the Offer. The premium implied for your shares by the Offer Price is materially below the average premiums paid in Australian corporate control transactions;
- Unsolicited nature of the Offer: Webcentral’s Offer has been made without any prior engagement with Cirrus’ Board, suggesting that Webcentral may not have the interests of all Cirrus’ shareholders in mind; and
- Not offering enough for benefits it may receive: Webcentral is not offering enough for the benefits it may receive; in the event Webcentral is able to secure 100% of Cirrus’ fully paid ordinary shares on issue, Webcentral could likely benefit from meaningful corporate overhead and administrative cost savings which Cirrus Directors consider are not reflected in the Offer.
Further details in respect of the Cirrus' Board recommendation will be outlined in its Target's Statement.
The Offer is unconditional (other than in respect of a “no prescribed occurrences” condition) and as such Webcentral is only able to withdraw the Offer in very limited circumstances. Webcentral’s Offer must remain open for at least one month which is expected to be until 16 September 2021.
As such there is NO URGENCY for Cirrus shareholders to take any action at this time, including selling their shares now, because:
- Doing so would deprive Cirrus shareholders of the opportunity to benefit from any future growth; and
- Cirrus shareholders will lose the opportunity to benefit from any potential superior proposal or alternative transaction, should one emerge.