Telecom has been saved from a potentially costly takeover battle for Australia's third-biggest tecommunications company, AAPT, after its main rival was forced to withdraw.
Last night Cable & Wireless Optus announced that the Australian anti-monopolies authority had refused to clear its $A1.5 billion (500Ac a share) bid for AAPT.However, Optus, Australia's second largest telecommunications firm, which already has around 10 per cent of AAPT, said it would remain a major shareholder in the company.
The news of the Optus knockback caught Telecom by surprise. Last week it put in place bank credit lines of around $2 billion in preparation for a hostile takeover battle. This followed an earlier move by Telecom to buy a 10 per cent stake (at 570Ac a share) in AAPT to counter the Optus bid.
But with Optus out of the race, and the only other player signalling any interest, MCI Worldcom, also bowing out, the path is now wide open for Telecom.
Industry sources said that Telecom would now look to make a partial takeover bid instead of going for the whole company.
Over the coming days it would assess its target level. This was likely to be under 50 per cent, given Telecom's good relationship with AAPT's board and management.
A key determinant of what level Telecom settles at, however, will be what AAPT's largest shareholder AAP Information Systems (AAPIS) decides to do with its 17.3 per cent holding.
If AAPIS sells, then that leaves AAPT's register wide open. Telecom might then feel comfortable with between 30 per cent and 40 per cent with the chance of increasing its holding by 3 per cent every six months through creep provisions.
If AAPIS does not sell, Telecom might feel more comfortable with a holding nearer to 50 per cent.
The major shareholders of AAPIS are John Fairfax Holdings and News Corp.
Last month Optus' chief executive Chris Anderson was quoted in Australia as saying AAPIS wanted to sell.
