Southern Phone, one of the largest telecommunications companies in regional Australia, has entered into a conditional agreement under which AGL Energy Limited (AGL) is proposing to acquire 100% of the company.
The AGL offer is an all cash offer of $27.5 million, delivering an outstanding return of $785,714 on each shareholder’s total investment of $2.
Eurobodalla Shire Council, being one of the shareholders, will be one of the recipients of the $785,714.
Southern Phone Managing Director, David Joss said that "given our shareholders are all local Councils, the proposed acquisition by AGL presents a great opportunity for the Councils to utilise the return to address priorities facing their local communities."
“Our company has grown to become one of the most successful providers of fixed line, mobile and Internet communications services across regional Australia. Our unique Local Government ownership structure has created a community focused business that has achieved great success. However, with the advent of the NBN the need for achieving a greater share of the market has significantly increased and the timing is now right for a new shareholding structure,” Mr Joss said.
“AGL is committed to maintaining the Southern Phone brand and products, as well as the existing business operations and telecommunications services to our 100,000 customers, across regional Australia.
“Importantly, AGL will continue to retain the Southern Phone team.
“We believe the AGL offer is a great opportunity for our shareholders, our staff, our customers.”
Formed in 2002 under the Federal Government’s Networking the Nation scheme, Southern Phone’s current constitution limits ownership to Australian local government shareholders and it can only self-generate capital. Although community ownership has been a strong tenet of the business in the past, now is the right time to change the structure and establish the ability to leverage shareholder capital.
Mr Joss said that the Southern Phone Board unanimously recommends shareholders accept the AGL offer.
“The Board has made this decision based on independent advice that the offer represents fair value for shareholders and provides a great outcome for the company, its customers and the regional communities we serve,” said Mr Joss.
AGL CEO and Managing Director, Brett Redman, said the acquisition presents a range of exciting opportunities for their residential and small business customers.
“We are focused on responding to our customers’ evolving needs as we transform from a major energy retailer to a major, broader essential service provider.”
“We believe the acquisition, as part of our broader strategy, will create significant value for our connected customers and also for our shareholders.”
