5G Networks Limited (ASX:5GN) made a non-binding indicative proposal to acquire remaining 89.8% stake in Webcentral Group Limited (ASX:WCG) from Keybridge Capital Limited (ASX:KBC) and other shareholders for AUD 19.5 million on September 4, 2020. Under the terms of the transaction, 5G Networks will issue 1 5GN share for every 12 Webcentral shares. The transaction will be funded from the AUD 27.5 million placement and from existing cash on balance sheet and available debt facilities. 5GN has also agreed to provide an unsecured loan of AUD 0.5 million to Webcentral to be used by Webcentral to pay Web.com the Reimbursement Fee. A reimbursement fee of AUD 0.2 million may also be payable by Webcentral to 5GN in certain circumstances and 5GN must pay the reverse reimbursement fee to Webcentral of AUD 0.2 million. As soon as reasonably practicable after the offer has become or been declared wholly unconditional and 5GN has issued the consideration under the offer for, and, together with its Subsidiary, 5G Network Operations Pty Ltd, becomes the registered holder of, at least 30% of all, Webcentral Shares, if requested to do so in writing by 5GN, Webcentral must use its best endeavours to procure the appointment of 2 persons nominated by 5GN as Directors of Webcentral (subject to each proposed appointee having provided a consent to act as a Director). As soon as reasonably practicable after the offer has become or been declared wholly unconditional and 5GN has issued the consideration under the offer for, and, together with its Subsidiary, 5G Network Operations Pty Ltd, becomes the registered holder of, at least 50.1% of all, Webcentral Shares, if requested to do so in writing by 5GN, Webcentral must use its best endeavours to procure; the appointment of persons nominated by 5GN in writing to be Directors of Webcentral (subject to each proposed appointee having provided a consent to act as a Director), such that a majority of the Directors of Webcentral are Directors nominated by 5GN in writing and that any persons nominated by 5GN by written notice to Webcentral resign from the Webcentral Board and the boards of the other members of the Webcentral Group, with such written notice of resignation to provide that the outgoing Director (a) has no Claim outstanding against the relevant Webcentral Group Member; and (b) irrevocably releases the Webcentral Group for any Claims they may have against the Webcentral Group. On October 22, 2020, Natalie Mactier, a nominee of 5GN was appointed as a Director of Webcentral and Andrew Macpherson resigned as a Director of Webcentral.

The transaction is subject to 50.1% minimum acceptance condition, no ‘prescribed occurrences' condition, no material adverse change condition, negotiation and entry into a bid implementation agreement between 5GN and Webcentral and unanimous Webcentral Board recommendation. As of September 15, 2020, the proposed scheme remains subject only to customary closing conditions. On September 7, 2020, Webcentral advises that they consider the 5GN Proposal to be a superior proposal to the Web.com proposal. Web.com now has 5 days to provide a matching or superior proposal. Webcentral advises that no action should be taken by Webcentral shareholders pending the assessment. As of September 15, 2020, the transaction was approved by Foreign Investment Review Board. Webcentral Board unanimously recommends that Webcentral shareholders accept the 5GN offer, in the absence of a superior proposal on September 17, 2020, October 13, 2020 and October 15, 2020. As per the update on October 19, 2020, the transaction is subject to approval of shareholders of Webcentral Group Limited. On October 13, 2020, offer has now become unconditional and is free from all defeating conditions. As of October 29, 2020, Board of Directors of Webcentral Group Limited passed the resolution for third supplementary target statement. As reported on October 15, 2020, each of the Directors of Webcentral has accepted the offer. 5GN has a relevant interest of 34.75% in Webcentral. 5GN is now entitled to two Board seats. Joe Demase and Joe Gangi, Director of 5GN were appointed to the Board of Webcentral. As of October 29, 2020, Takeovers Panel has declined to conduct the proceedings for the transaction. As of November 2, 2020, Keybridge Capital Limited has applied to the Takeovers Panel seeking a review of the Panel's decision. The offer period will close on October 20, 2020. As reported on October 9, 2020, the new date for 5GN giving the notice of the status of defeating conditions is October 16, 2020 and offer is now scheduled to close on October 27, 2020. As on October 23, 2020, the offer was further extended till November 3, 2020. The Board of Directors of 5G Networks passed the resolution fore extension of offer period. As of October 28, 2020, the offer period is extended to November 10, 2020.

Keybridge seeks interim orders that 5G Networks not process any acceptances until such time as the Panel has considered this application and that 5G Networks extends its bid by 3 weeks. The President of the Panel has made interim orders that 5G Networks Limited must not process any acceptances received on and from October 23, 2020 and 5G Networks must extend the offer period in relation to the offer for a period of not less than one week. The interim orders have effect until the earliest of further order of the Panel, determination of the proceedings or 2 months from the date of the interim orders. On October 22, 2020, 5GN and Webcentral entered into an agreement to waive the condition to drawdown under the 5GN Secured Loan that 5GN hold a relevant interest in at least 50.1% of Webcentral shares. This waiver is stated to take effect on and from the date that the Webcentral Board consists of a majority of persons nominated by 5GN.

The deal is expected to be transformational for 5GN's earnings, with earnings per share of 5GN expected to more than double on a pre-synergies basis, and further increased on a post-synergies basis. Macquarie Capital (Australia) Limited acted as financial advisor, Andrew Rich of Herbert Smith Freehills acted as legal advisor and Glen Kanevsky, Sean Holmes, Matthew Fraser and Stephen Lomas of Deloitte Corporate Finance Pty Limited, Investment Banking Arm acted as financial advisor to Webcentral Group Limited. Wilsons Corporate Finance Limited acted as financial advisor and Cornwalls acted as legal advisor to 5GN.