In top news on Australian stocks, Aussie Broadband Ltd. (AU:ABB) shares were down by around 5% in early trading hours on Monday but later rebounded to a gain of 0.56%. This volatility was triggered after the company’s competitor, Superloop Limited (AU:SLC), asked Aussie Broadband to reduce its stake in Superloop to comply with Singapore regulations.
The news came as another blow to ABB shares following an 18% plunge last week when Origin Energy Ltd. (AU:ORG) terminated its white-label wholesale deal with the company.
Aussie Broadband and Superloop are Australian telecommunications companies providing a range of telecom and internet services to customers.
The Backdrop
In February, Aussie Broadband made a non-binding proposal to acquire Superloop for an implied value of approximately $467 million. As part of this move, Aussie Broadband acquired 19.9% of Superloop’s shares. However, the company did not obtain any prior approval for these shares from the Info-Communications Media Development Authority (IMDA) in Singapore. Superloop’s constitution bars acquisitions exceeding 12% without the necessary statutory clearance from the IMDA in Singapore. As a result, Aussie Broadband will need to decrease its stake in Superloop to below 12%.
Aussie Broadband acknowledged in its released statement that it has violated Superloop’s constitution and called it “inadvertent.” However, Superloop pointed out that its rival recently dealt with the IMDA in Singapore regarding its acquisition of software company Symbio.
Superloop has granted Aussie Broadband 10 business days to divest its holding.
What is the Price Target for Aussie Broadband?
On TipRanks, ABB stock has received a Hold consensus rating based on two Buys, one Hold, and one Sell recommendation. The Aussie Broadband share price target is AU$4.40, which is 23.6% above the current price level.
