Cirrus whips backhander at WebCentral upon concession of failed hostile takeover

Hostile takeover attempts are a thing of beauty when it comes to listed companies poop-flinging in the boardroom but IT services provider Cirrus Networks (ASX: CNW) has had the last laugh over rival WebCentral (ASX: WCG) by forcing their hand in abandoning their attempt.

Despite WebCentral having a $70m market cap, more than double that of Cirrus’ $30m, the former has failed in numerous attempts to acquire Cirrus, of which it held an 18.5% equity stake. WebCentral even went as far as lodging a 249D notice in an attempt to have Cirrus shareholders overthrow the Cirrus board, which went down like a sinking ship as shareholders chose to back Cirrus which correctly insisted that the $0.032 per share takeover offer was an insult.

Now, with WebCentral struggling on their own after declaring a $25m net loss for FY22 and just $5.3m of cash on hand, they have sold their 18.5% stake in Cirrus for $5.5m and abandoned their attempt.

This was music to the ears of Cirrus Managing Director, Chris McLaughlin, who was quick to lay one final backhander to the cheek of WebCentral, whose share price fell 58% during their failed 12-month hostile takeover attempt.

“This trade highlights the strong interest in Cirrus and affirms our confidence in the strategic direction of the business. The support of our existing shareholders and introduction of new institutions significantly improves the profile of our share register and to execute such a large trade on market reinforces the positive sentiment around the stock,” said McLaghlin.

“Over the past 12 months Cirrus has performed well against the broader Australian stock market as well as the Australian Tech Stocks Index, and with a strongly performing business and improving registry profile we are confident this can continue.”

Included in the announcement was this clear graph emphasising how poorly WebCentral shares have performed not just against Cirrus, but the broader market of Australian tech stocks.

The 172 million CNW shares sold by WebCentral were exchanged via an off-market book build that saw existing shareholders and new institutional investors enter the Cirrus share register. 

Cirrus has reported a strong end to FY22 which has made up for supply chain issues encountered in the first half. $60m in revenue generated in H2 represented a 13.5% increase on the previous corresponding period and took FY22 revenue to $104m. 

The Company expects this to deliver EBITDA of $2.1m while preparing for a record backlog of $12.1m in orders with $9.6m cash on hand.