Datafast and Chariot have terminated a merger agreement, putting an end to a troubled relationship that began in July last year. The announcement coincides with Chariot's acquisition of Melbourne-based independent Alphalink for $6.5 million.
Both parties attributed the decision to the results of due diligence findings.
"Chariot determined that there were a number of matters that impacted materially on the desirability of proceeding with the merger and that consequently the merger would not be in the best interests of Chariot shareholders," Chariot's statement read.
The Alphalink acquisition had been on hold since December but had not been finalised due to the restrictions of the Merger Implementation Agreement (MIA) with Datafast, according to Chariot's statement.
Datafast also claimed it had become aware of several matters during due diligence that had materially impacted the desirability of the proposed merger.
"Consequently, considering advice from its corporate advisors, Datafast no longer believes that the proposed transaction, on its current terms, is in the best interests of Datafast shareholders," Datafast said in a statement.
Chariot's managing director, Robert Horlin-Smith, would not comment on which company actually called the shots.
He said it was more or less a mutual decision.
"Both parties tried to construct a deal that everyone was happy with but unfortunately it wasn't to be and now is the time to move on, and our announcement today [of the Alphalink acquisition] is the first step in that direction and I'm sure that Datafast havs its own plans," he said.
However, Datafast's general manager, John Lane, said the company had ended the MIA because Chariot had refused to renegotiate the terms of the deal.
"It wasn't mutual, I can say that on the record," he said. "Chariot was prepared to proceed with the deal on its existing terms. We said that we were not prepared to proceed and wanted to renegotiate the terms of the deal. They declined, so we terminated the MIA.
"We were very surprised to see their announcement which did seem to suggest that it was mutual or even that they had terminated it."
Telecommunications analyst, Paul Budde, said the split between Datafast and Chariot was inevitable.
"This has been an on-and-off affair for far too long so there is not enough trust between the two parties," he said. "There were too many 'ifs' and 'buts' in the contract and without that level of like mindness, there was little hope for a future."
Lane said that Datafast would continue down the acquisition track.
"But we're not like Chariot, we don't have any acquisition announcements to pull out of our back pocket and lay on the table right away," he said. "We are just bedding down some of our previous acquisitions and there will be another raft of acquisitions in the next couple of months."
Datafast recorded revenues of $18.55 million in the last financial year ending June 30, 2004, while Chariot ran up a $197,000 loss for the same period. This represented an $813,000 improvement on the year before.