Regional telco Southern Phone has received a purchase offer from AGL and the company is recommending local government shareholders accept the bid.
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The telco says it has entered into a conditional agreement under which AGL Energy Limited (AGL) is proposing to acquire 100 per cent 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," Southern Phone said in a media statement.
The telco head office is in Moruya in the Eurobodalla Shire and that council is one of several regional councils which own shares in the company.
Southern Phone Managing Director, David Joss said "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," he said.
"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.
"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."
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Formed in 2002 under the Federal Government's Networking the Nation scheme, Mr Joss said Southern Phone's current constitution limited ownership to Australian local government shareholders and it could 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," he said.
Mr Joss said that the Southern Phone Board unanimously recommended 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," he said.
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," Mr Redman said in a joint statement with Southern Phone.
"We believe the acquisition, as part of our broader strategy, will create significant value for our connected customers and also for our shareholders."
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