)
Managed IT services provider Brennan has thrown its hat into the ring in an attempt to buy beleaguered cloud computing group AUCyber (ASX: CYB), a Brisbane-based company linked to data centre giant NEXTDC (ASX: NXT) and formerly known as Sovereign Cloud Holdings.
Brennan's offer at $0.14 per share values the business at $22.8 million, up from an $18 million bid lobbed by 5GN Networks late last week - a move that coincided with the initial suitor acquiring a 10.74 per cent stake in AUCyber from institutional investors.
5GN's $0.11 per share offer represented a modest premium of less than 1 per cent on CYB shares' weighted average in the preceding five days.
Both 5GN and Brennan's offers are well below CYB price levels when a shareholder vote took place at an annual general meeting (AGM) in October to change the company's name to AUCyber, but the rebrand was hardly to blame with the group later beset by an earnings guidance withdrawal and leadership turmoil.
At the AGM, chair Cathie Reid highlighted a strategic restructuring of the group with targeted acquisitions to expand its customer base, offer a broader range of products and services, and enhance its capabilities to serve new markets.
But in early December AUCyber revealed its acquisitions of PCG Cyber, Venn IT and Arado had not gone to plan. The merger of these operations with its core AUCloud business performed below expectations with unaudited revenue down 29 per cent on budget over the four months to the end of October.
This meant AUCyber was running at an underlying EBITDA loss of $1.3 million over the period, and that bad news was compounded by the shock resignation of Peter Maloney as managing director and CEO.
The announcement on 4 December said Maloney would assist with the transition of his CEO duties in the interim until 31 March 2025 unless the board elects otherwise.
Just over two weeks later, the board did elect otherwise, terminating Maloney's employment with immediate effect as Cathie Reid took on a caretaker role as executive chair.
Now that Maloney has left the company, there are only three board directors left - Cathie Reid, Ross Walker, and Craig Scroggie, with the latter being the nominee and chief executive officer of NEXTDC which holds almost a third of AUCyber's shares.
The competing takeover bid from Brennan is non-binding and subject to multiple conditions including AUCyber not declaring any dividends, making any acquisitions or disposals of assets worth more than $100,000, and no changes to share capital.
Brennan's bid also conditional upon satisfactory diligence, no material changes to AUCyber's operations or liabilities other than those previously disclosed to the market, credit approval from the suitor's existing lender, and a limit of AUCyber aggregate transaction costs and expenses of $1.7 million.
As it did for the 5GN offer, the board recommends shareholders take no action. It has appointed Latimer Partners as financial adviser and Baker McKenzie as legal adviser in relation to its takeover defence.
CYB shares are up 30.77 per cent at the time of publication at $0.17 - well above Brennan's offer of $0.14 per share but below the $0.23 level when the company changed its name in October.
)
