MCI WorldCom Bids $323 Million for OzEmail
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MCI WorldCom is making the $2.20 a share bid through UUNET Holdings Australia, one of its wholly-owned subsidiaries. MCI WorldCom has already acquired almost 22 million newly-issued shares that give it almost a 15 percent stake. OzEmail has almost 147 million shares outstanding.
Once the deal is completed, OzEmail would become the Australian Internet subsidiary of UUNET. The offering price represents about a 50 percent premium over OzEmail's average trading price over the past three months.
The deal comes after widespread speculation in late November that a variety of companies, including America Online Inc., Cable & Wireless and News Corp., were pursuing the ISP. And many analysts are predicting OzEmail will demand more money and might even talk with other potential suitors.
"The local fiber we are deploying in Australia complements OzEmail's Internet presence and the vast international resources of MCI WorldCom, particularly our worldwide Internet backbone, will bring improved global connectivity in OzEmail's customers."
OzEmail directors Malcolm Turnbull, Sean Howard and Trevor Kennedy, who own 54 percent of OzEmail, said that in the absence of a higher offer, they intended to accept for their holdings.
They told Reuters the board would make a recommendation to shareholders after it reviewed MCI Worldcom's offer documents.
Analysts said the acceptance was code for "more."
"They're sending a signal to the marketplace that they would expect a further offer," said Adam Spowers, telecommunications analyst at HSBC Securities.
Another analyst was more pointed: "What they're saying is the guy who puts down the most cash gets the company."
Asked of analysts' assessment of directors' intention to accept, Michael Ward, a vice president of the company, told Reuters: "It's fair to say that OzEmail remains attractive to other companies."
"We await any interest, but at this stage the board has indicated it believes a reasonable offer has been made."
He declined comment on whether OzEmail was in talks with any other suitor.
Based in Sydney, OzEmail has about 80 points of presence in Australia and 15 POPs in New Zealand. The company offers dial-up and leased line access, wholesale connectivity to other ISPs, Internet telephony and Web hosting through its WebCentral subsidiary.