SingTel Optus to buy IT services provider Alphawest

Optus has made a $25.9 million-dollar cash takeover bid for Australian-owned consultancy and integrator Alphawest.

Alphawest's board has unanimously recommended acceptance of SingTel Optus' offer, which was made through its subsidiary Optus Networks, according to an ASX announcement.

Optus has offered 68 cents a share for all ordinary Alphawest shares, including a deal to option 19.96 percent of Alphawest shares held by the UXC family of companies at the same price. Both agreements were signed 21 July.

Garry Henley, chief executive at Alphawest, was not available to comment when CRN called.

However, Alphawest chairman Hugh Beggs said in a statement that Alphawest was "an excellent fit" with Optus' integration capabilities.

The companies had worked together previously and partnered well, he said.

"The Optus offer represents a substantial premium to Alphawest's current and recently-traded share price. It is the opinion of the Alphawest board that Optus offer represents good value for all shareholders," Beggs said.

Alphawest equity was most recently valued at $22.9 million, based on a 20 July closing price. Further, Alphawest has reported a net debt of $3 million, which Optus would assume, the ASX statement said.

Luisa Ford, corporate affairs manager at Optus, said Alphawest appealed as an acquisition because of its strengths in network integration, consultancy skills and its people. The takeover bid was fully free cashflow-funded, she said.

"We are very keen to work with Alphawest's senior management team," she said. "Obviously, we will review the business but Alphawest staff will [at least at first] remain in their current positions."

Ford said Optus was buying Alphawest to help it expand into IT services. IT services and telecommunications were converging as both grew increasingly Internet Protocol-based, she added.

The Alphawest brand would be retained. "It will be managed as a subsidiary of Optus, reporting to Optus Business," Ford said.

Optus Business' acting managing director John Simon would initially be responsible for Alphawest, she said.

Potential acquisitions were decided on their own merits, case by case. Optus hadn't been specifically looking to buy an Alphawest-type company in Australia, but the opportunity had presented itself, Ford said.