MNF Group Limited (ASX: MNF) is specialized in internet communications and it also provides hosted voice and data communications services to its users. On 6 December 2018, the company announced about entering into an agreement with Inabox Group Ltd (IAB) for the acquisition of IAB’s Wholesale and Enablement Business. Following the release of this news, the share price of the company decreased by 3.3% as on 6 December 2018.
Earlier SB&G Consortium (SB&G) had made an off-market takeover bid for IAB; however, as per MNF’s board, the SB&G proposal that was revised later was incomplete and contained a high degree of complexity and execution risk. The SB&G proposal was dependent on future actions and events which were not within the control of SB&G which is why MNF has considered its proposal as superior.
The agreement made by MNF is fully funded by MNF using its debt facility and MNF is ready to complete the purchase within 3 business days of IAB shareholders approving the transaction at the General Meeting. As per the MNF’s announcement, the MNF agreement does not require IAB to breach its banking covenants and also it does not require any further consideration from IAB’s bank or Australian Securities and Investments Commission (ASIC). After getting the approval for MNF transaction, IAB will not be required to raise further capital before the end of December which the IAB Board has indicated would otherwise be required. The MNF agreement will allow the IAB Board to pay a fully franked dividend from the profits generated by the sale of the business. The Board of MNF is standing firm on its current agreement and the board is having no intention to increase or improve its offer.
After receiving the revised SB&G Takeover Offer on 3 December 2018, Inabox had requested SB&G to respond to some important questions about the offer in order to properly inform the Company’s shareholders on its merits compared to the improved sale agreement with MNF Group Limited.
After getting the reply from SB&G on 5 December 2018, the board of Inabox updated the shareholders on its views of the Improved SB&G Takeover Offer and its recommendation with respect to the Improved MNF Transaction.
On 6 December 2018, Inabox Group also released a statement that Inabox’s board is unanimously recommending the improved MNF Transaction in the absence of a superior proposal. Further, the board also expressed their concerns about the Improved SB&G Takeover Offer. SB&G is promising several benefits in its revised proposal but the uncertainty around the improved SB&G Takeover Offer outweighs the value of its benefits. Due to this reason, the board of Inabox has unanimously recommended the MNF transaction.
In the last six months, the share price of MNF decreased by 23.7 percent as on 5 December 2018. MNF’s shares traded at $3.800 with a market capitalization of circa $288.37 million as on 6 December 2018.