The ihug Force Corporation merger plan appears to be dead on arrival. Force management has delayed a decision on the merger deal until May 15.
The deal signed with ihug runs out this week and ihug is unwilling to extend the deadline again.
“We’ve extended it once and I don’t want to dick around while they work out what it means to be an IT company. They should have done all of that already,” says ihug director Nick Wood.
He says he can’t blame Force for being cautious over the deal with the collapse of the tech stocks in markets around the world. “If we’d had this meeting last week there wouldn’t have been a problem.”
But Force Corporation management is keen to see the deal completed.
“We’ve just got to work through these issues the shareholders have and make sure everyone’s happy,” says company secretary Peter Holdaway.
The three major shareholder blocks who voted for a postponement are French insurance company Axa, investment firm Armstrong Jones and Shamrock Investments, the company that tried to buy control of Brierley Investments in early 1999.
“They thought it would be unwise, given the unsettled nature of the markets, to vote on it yesterday - they wanted to step back and let the markets settle and see if the price Force is paying is realistic.”
Wood claims the deal was based on prices “at about where they are now” following the stock market corrections because “everyone could see they it was coming - it’s no surprise to anyone”. Wood has said it would take “a miracle” for negotiations to resume at this point.
Force was to issue 210 million ihug shares at 57.14 cents each, giving the ISP a value of around $120 million.
This isn’t the first ihug merger deal that has fallen through. Sky TV tried to buy 30% of the company last year for $30 million, but the deal fell apart amid rumours of a culture clash between the two boards.