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REUTERS
Sydney, April 17: Australian telecommunications group AAPT Ltd on Saturday said its chairman had advised shareholders not to act on a A$1.5 billion takeover bid by Cable & Wireless Optus Ltd.
An AAPT spokesman said chairman Lee Casey had advised "shareholders to take no action at this stage" and that the AAPT board would meet on Monday to consider the offer.
"AAPT directors are reserving their position. There is a meeting of the board on Monday which will consider the options and comment," Tony Rogge, a spokesman for AAPT, told Reuters.
Australian Broadcasting Corporation (ABC) radio on Saturday said AAPT chief executive Larry Williams had said the bid, at A$5 a share the same as AAPT's Friday close, seemed too low.
But he said he was not opposing a merger or holding out fora higher bid, reported ABC, which broadcast no quote from Williams.
Rogge said that as far as he was knew no AAPT official had commented on the C&W Optus takeover bid.
However, in a statement late on Friday, Casey said thetakeover bid was "entirely a C&W Optus initiative" -- indicating it may not be entirely welcome by AAPT.
C&W Optus, 52.8 per cent owned by Britain's Cable & Wireless Plc, launched its bid for AAPT with a strategic 10.6 per cent stake bought on-market on Friday.
C&W Optus said on Friday it believed its bid was fair and that it would not become involved in an auction for AAPT. It said it would walk away from its bid if it could not win the smaller telecom company at a reasonable price.
"This is not an offer at any price," said C&W Optus chief executive Chris Anderson.
But some analysts expect C&W Optus to be forced to increase its offer. The A$1.49 billion (US$954 million) bid valued AAPT at 24 times EBITDA (earnings before interest tax depreciation and amortisation), compared with a sector average of 14.5 times.
C&W Optus, Australia's second largest telecom group, after Telstra Corp needs approval from competition and foreign-investment authorities for its takeover of AAPT, the third telecomgroup.
Anderson has said the AAPT takeover would increase competition in the telecommunications market, which is dominated by Telstra, two-thirds owned by the national government.
"It will help get services to small business, it will help in the areas of data, it will help particularly in rural and regional and we genuinely think it will help us with competition," Anderson told ABC radio.
But The Consumers Telecommunications Network opposes the takeover, saying it would limit choice in the marketplace.
The chairman of the Australian Competition and Consumer Commission, who must decide on whether to allow the takeover, is in two minds.
"We can see that side of the argument that the two of them together will be a stronger competitor to Telstra," said Alan Fels. "And we can also see the other side of the argument that the two are competing with one another and to that extent maybe there'll be less competition."
AAPT, which was founded by domestic news agency AAP Communications, listed in November1997 after its shares were offered to investors at A$1.85 each.Its major shareholders are Singapore Telecom and AAP Communications, whose major shareholders are publishers John Fairfax Holdings Ltd and News Corp Ltd.
Singapore Telecom sold 15.0 per cent of the company into the open market on Friday and said it retained 2.6 per cent.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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