May 1, 2015
Merger and acquisition activity in the telecommunications sector is heating up. In the latest move, TPG Telecom has increased its shareholding in Amcom to 18.6% in an apparent attempt to block the proposed friendly merger between Amcom and Vocus. TPG has stated that it will vote against the merger proposal and that it has no plans to make a counterproposal.
Vocus has stated that it intends to refer the matter to the Australian Competition and Consumer Commission. We think TPG’s move is an attempt to limit competition. As the merger proposal requires 75% in to vote for the proposal and Vocus is unable to use its 10% shareholding in Amcom to vote in favour of the deal, there is a likelihood of the deal not being successful when Amcom shareholders vote on 6 May as retail shareholders tend to have low rates of participation in voting at shareholder meetings.
It is quite possible that TPG is attempting to stall the proposed Amcom-Vocus merger while it focuses its attention on acquiring iiNet. We suspect that this battle has a long way to play out.