Bulletproof's third-biggest shareholder rejects Macquarie Telecom takeover

Bulletproof's third-largest shareholder said it plans to reject Macquarie Telecom's bid acquire the cloud provider for $17.9 million.

MacTel revealed its bid to acquire Bulletproof earlier this week for 11 cents per share, representing a 64 percent premium on its closing share price before the announcement of 6.7 cents.

Microequities Asset Management said it would reject the bid in "its current form" of 11 cents per share. Chief investment officer Carlos Gil called the bid "highly opportunistic and unreasonable," arguing that the company had scale, technical prestige and an enviable corporate client base.

“The business is strongly positioned to benefit from the clearly observable structural shift to the public cloud. We consider this bid a highly unsatisfactory consideration for a business with these compelling qualities,” Gil said.

He added that the company showed signs of a financial turnaround in the 2018 financial year. The company reported a $6.1 million loss last financial year with an underlying EBIT loss of $2.1 million and revenue of $49.2 million.

“We note that in 1QFY18, Bulletproof management accounts show an EBITDA profit of $600,000 compared to a loss of $1.2 million in the previous corresponding period, a $1.8 million improvement. Bulletproof management’s internal forecast is for an EBITDA result in FY18 of $5.5 million, meaning Macquarie’s bid represents an extremely low 3.77x EBITDA multiple."

Microequities today upped its stake in Bulletproof to 6.5 percent. Bulletproof's largest shareholder is a financial trust associated with co-founder and chief executive Anthony Woodward with 16.11 percent. MacTel has already been given the opportunity to acquire Woodward's shares via a call option bid.

Bulletproof's second largest shareholder is Domains and Web Pty Ltd with 12.63 percent, which is owned by Bulletproof co-founder Lorenzo Modesto, who left the company in September. Modesto declined to comment.

If MacTel manages to acquire at least 90 percent of Bulletproof shares, it will be given the opportunity to compulsorily acquire the remaining shares it doesn't already own.

Bulletproof is yet to give its final decision on whether to recommend MacTel's acquisition proposal.