After much speculation, Singapore Telecommunications Limited (SingTel) has officially put forward a proposal to bid for Optus, which would see its parent company Cable & Wireless plc quit majority shareholder status.
The proposed offer, which values Optus' equity at up to $17.2 billion, is expected to result in, when complete, the exit of majority shareholder C&W, which is consistent with its global strategy of focusing on data services to business customers.
C&W has entered into an agreement with SingTel to accept the proposed offer in respect of a total of 19.9 per cent of Optus' issued capital.
Optus has also confirmed that it has entered into an Implementation Agreement to facilitate SingTel's offer being put to shareholders. SingTel expects to dispatch its 'bidder's statement' to shareholders within eight weeks.
In SingTel's proposal to Optus, it is offering the company up to $4.57 per share. Its proposal is a result of Optus' Strategic Review, which was announced on 27 September 2000. The review focused on alternatives to optimise growth prospects and shareholder value.
Chris Anderson, chief executive of Optus said: "With this proposed transaction, Optus will grow from being a successful, highly competitive Australian entity to becoming part of a formidable regional player of stature, significance and strength."
"SingTel's powerful position in the region will assist growth in our major lines of business and enhance Optus' status as the growing challenging competitor in Australia."
Anderson also said SingTel would offer opportunities throughout the Asia Pacific region, particularly in the high growth wireless and data services sectors. He said Optus' business would form a "key part of an extensive Asia-Pacific telecommunications operator".
Vodafone Pacific has also announced that they have pulled out of the race for Optus, citing "it would be unable to conclude a transaction that would be in the best interest of its shareholders".
Brian Clark, CEO of Vodafone said: "We are committed to growing a profitable business in Australia. The proposed transaction simply did not meet our return criteria."
The merger of Optus with SingTel would create an Asia-Pacific telecommunications company with expected proforma revenues of almost $10 billion for the year to 31 March 2000, and a combined market capitalisation of approximately $49 billion.
If successful with its bid for Optus, SingTel said it would seek a general listing of its shares on the Australian Stock Exchange.