Merger Of Fund And Online Broker Off
Sydney Morning Herald
Thursday April 5, 2001
A deal for the News Corporation-backed dot com incubator eVentures to merge with Internet broking group eStar has been claimed by eStar's dwindling cash reserves and an unhappy shareholder base.
EStar, chaired by former NSW premier Mr Neville Wran, last night told investors both companies had ``mutually agreed not to proceed".
However, it is understood an independent report from accountant Grant Thornton labelled the deal ``unfair but reasonable" and suggested eStar shareholders would have their interests unfairly diluted.
EStar's second largest shareholder, Hong Kong-based Cyber Group, was also believed to strongly oppose the deal.
EVentures had been set up by Japan's Softbank and News Corporation's ePartners as a venture capital fund to bring major Web brands to Australia. A deal mooted in February involved eVentures selling SMS group MessageMedia to eStar for $8 million in scrip and investing another $8 million in cash.
EVentures was to emerge with a 47 per cent stake and eStar planned to change its name to eVentures Holdings. Later discussions suggested eStar was also going to acquire eVentures New Zealand.
EStar founder Mr Albert Wong said yesterday he now believed the deal was ``not in the best interests of shareholders.".
``The numbers didn't add up and in the end we couldn't complete," he said.
Mr Wong said eStar had cash reserves of $12.1 million as at March 31, but monthly and legal costs associated with the failed deal would reduce that figure to $11.7 million. It is understood eStar's cash position was of some concern to eVentures.
Mr Wong said eStar would continue its online broking business.
© 2001 Sydney Morning Herald
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