(Source: Business Wire)
iBasis, Inc. (NASDAQ: IBAS) today announced that the Special Committee of its Board of Directors has unanimously determined that Royal KPN N.V.'s (AMS: KPN and OTC: KKPNY.PK) ("KPN") unsolicited tender offer to acquire all of the outstanding shares of iBasis common stock for $1.55 cash per share is grossly inadequate and not in the best interests of iBasis' minority stockholders other than KPN and its affiliates. Accordingly, the Special Committee recommends, on behalf of iBasis, that the minority stockholders reject KPN's offer and not tender their shares pursuant to the offer.
The Special Committee's decision was made after careful consideration, including a review of the financial aspects of KPN's unsolicited offer, with its independent financial and legal advisors, Jefferies & Company, Inc. and Gibson, Dunn & Crutcher LLP, respectively.
"After carefully analyzing KPN's unsolicited tender offer with independent financial and legal advisors, the Special Committee unanimously concluded that it is opportunistic, grossly inadequate and not in the best interests of iBasis' minority stockholders," said W. Frank King, Chairman of the Special Committee of iBasis' Board of Directors. "iBasis today is a leading wholesale carrier of international long distance calls. KPN's offer significantly undervalues the Company's current performance and long-term prospects and fails to compensate minority stockholders for iBasis' substantial growth opportunities and the numerous initiatives that are underway and expected to meaningfully contribute to the Company's earnings. Furthermore, as KPN and its representatives on the iBasis Board are well aware, iBasis recently completed the integration of KPN's international wholesale long distance voice business, which is now delivering important near- and long-term benefits. In addition, we believe the offer was timed to exploit the Company's depressed stock price.
"The Special Committee and management team are committed to maximizing value for all iBasis stockholders. We will take all necessary steps to ensure that minority stockholders receive full value for their investment in iBasis. Accordingly, the Board recommends that the minority stockholders reject KPN's offer and not tender their shares into the offer," concluded Mr. King.
Reasons for the Special Committee's Recommendation
The Special Committee has conducted a thorough review and consideration of the offer, and, after consultation with members of senior management and the Special Committee's independent legal and financial advisors, has unanimously determined that the offer is grossly inadequate, opportunistic and not in the best interests of the Company and its minority stockholders.
Accordingly, and for the reasons described in more detail below, the Special Committee unanimously recommends that the minority stockholders reject the offer and not tender their shares to KPN pursuant to the offer.
The Special Committee considered each of the following factors in support of its recommendation that the minority stockholders reject the offer and not tender their shares to KPN in the offer:
KPN's $1.55 per share offer significantly undervalues iBasis' current results and long-term prospects and does not adequately compensate the minority stockholders for their shares.
Industry Leader. The Company is a leading wholesale carrier of international long distance telephone calls.
The Company transported 23.5billion minutes of traffic over the iBasis Network in 2008, a volume of traffic that positions it among the largest carriers of international traffic in the world, based on global traffic statistics contained in the industry analyst publication TeleGeography 2009.
The Company's network infrastructure includes one of the world's largest international VoIP networks and has over 1,000 points of presence in more than 100 countries to facilitate the termination of voice traffic for approximately 800 carrier customers worldwide.
The Company's VoIP network is based on technologically-advanced switchless architecture, leveraging hardware, as well as patented and patent-pending technology for quality management and advanced routing, which results in higher voice quality, call completion and call duration for the Company's customers.
Substantial Growth Opportunities. We believe the Company has substantial growth opportunities from organic growth of its traditional business, from outsourcing and via acquisitions.
Organic Growth of Traditional Wholesale Business. We believe the overall growth of the international voice market, particularly the wholesale and VoIP segments, present attractive opportunities. According to TeleGeography, total international voice traffic grew at a compounded annual growth rate of 14.0% from 2002 to 2008. International VoIP traffic, as a subset of total traffic, grew faster at a compounded annual growth rate of 32.8% and grew from 10.5% to 22.6% of total traffic volume over the same time period. Similar to VoIP traffic growth, wholesale traffic has grown at a compounded annual growth rate of 18.3% from 2005 to 2008, achieving 56.4% of the total traffic volume from 51.3% over the same period. We believe the Company's position as a leading wholesale carrier, and its strength in VoIP, position it to benefit from the growth in the overall international voice market, and particularly in the faster growth VoIP and wholesale segments.
Outsourcing. We believe that the outsourcing of international voice traffic by carriers will accelerate in the coming years, as the international voice business becomes increasingly commoditized and carriers continue to realize that they do not have the scale and efficiencies of international wholesale providers. In our view, this trend is evidenced by the increasing number of such arrangements entered into over the last 18 months. Carriers such as TDC A/S, British Telecom and MTN have outsourced their international voice business to international wholesale providers to realize operational and capital cost savings. We strongly believe that our experience and expertise in outsourcing, as demonstrated by our integration of KPN and TDC's international voice business, combined with our scale and technologically advanced network architecture, including our patented and patent-pending technology for quality management and advanced routing, and our new integrated billing and ERP Systems, position the Company to capture a leading share of the emerging outsourcing market. We also note that the emerging outsourcing model generally involvesa more stable flow of traffic, which we believe will provide stable profitability for this business segment.
Acquisition. Due to the highly fragmented nature of the international voice market, we believe that there will be a number of opportunities to acquire the wholesale operations of retailers and carriers, which would permit the Company to solidify and expand its network footprint, increase its scale and geographic reach and create revenue and cost synergies. The Company's 2008 transaction with TDC A/S is an example of the acquisition of an incumbent carrier's international wholesale business in combination with the outsourcing of the carrier's own international traffic.
The offer is grossly inadequate from a financial point of view to iBasis' minority stockholders.
