Seven proposes cash takeover bid for Unwired

Stokes about-faces on earlier claim of no takeover interest

Despite previously claiming it had no plans to buy out Unwired, the Seven Network has proposed a takeover bid for 100 per cent of the wireless broadband provider of $0.45 a share.

Seven Network chairman, Kerry Stokes, said in an ASX announcement this morning that an Unwired purchase would let Seven boost its digital media platform. Unwired has rights to more WiMAX spectrum in regional Australia than any other company.

"Despite delays in certification of the technology to date, we believe in the potential of WiMAX as a mobile broadband solution," Stokes said.

In the proposed bid, Seven's wholly-owned subsidiary, Network Investments, would make an off-market cash offer to buy all the shares in Unwired for $0.45 each.

The offer price may rise to $0.50 a share if Seven acquired a "relevant interest" in at least 90 per cent of those shares by a particular date after November 8, 2007.

"We are acquiring a strong business and spectrum that will build our company's abilities to compete in new media technologies," Stokes said.

The offer follows the recent purchase by VoIP provider Engin - itself 34.3 per cent owned by Seven - of 19.9 per cent of Unwired shares.

"While Unwired's business has the potential to be very successful, it faces substantial capital requirements and execution risk in expanding its network to deploy WiMAX," the ASX statement read.

If Unwired was bought out by Seven, the wireless broadband provider would benefit from the larger companies strength and leverage - boosting value to Unwired shareholders, the statement said.

Engin, for instance, would be better placed to gain from Unwired's planned WiMAX rollout - but without Engin having to actually fund the construction of that network, it said.

Unwired chief financial officer, Ian McGregor, said Unwired's plans to deploy WiMAX wouldn't change as a result of any acquisition.

From the wireless broadband provider's perspective, a Seven purchase would build stronger foundations for the company and its plans rather than an immediately-needed cash injection, he said.

"Last year, we raised $15 million and that would keep us going until WiMAX deployment. And then we had a $5 million injection from Mitsui," McGregor said. "The funds now are enough to keep our existing business running."

That said, an acquisition by Seven would be great news, he said.

"They realise that we hold the spectrum for WiMAX," McGregor said

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