is eng a target

As of yesterday SEV have 64.1% of UNW so Engin gets its approx $4 million in profit.

Looks highly likely SEV will get over the 90% and will take UNW private. In any event it will have control.

It must make huge commercial sense to merge UNW & ENG (i.e. one call centre, billing, management, advertising, well just about everything is probably duplicated) with a combined client base of over 150,000.

Remember ENG just spent 4 or 5 million (?) on its “carrier grade� customer management and billing system.

So once SEV gets UNW does it bid for the rest of ENG and take it private as well, merging the 2 companies or does it just sell/merge UNW into ENG?

ENG has flagged the need for a capital raising in Q1 2008 with SEV likely to underwrite the issue.

I guess the $4 million UNW profit either reduces the amount needed to be raised or extends the timing.

Various Options

Option 1: ENG buys or has UNW merged into it. Not really fair on current ENG shareholders because of initial massive dilution and then additional dilution due to the huge capital requirements of UNW. (Overall just messy)

Option 2: UNW outsources its call centre and billing requirements (and perhaps other functions) to ENG with ENG taking on majority of UNW staff, etc. (Makes sense but reduces flexibility of UNW going forward and flags/forces SEV to up its shareholding in ENG.)

Option 3: SEV underwrites ENG capital raising and continues to increase its shareholding in ENG via each funding or capital raising exercise. (Very likely)

Option 4: SEV gets UNW then does deal/creates new entity with Austar and perhaps Optus as well to form national WiMax entity (or just buys Regional WiMax from Austar and does deal with Optus or goes it alone) (Who knows?)

Option 5: SEV bids for rest of ENG and takes it private merging it with UNW and/or above entity. (Likely)

Option 6: SEV does nothing or little with ENG until it sees how Naked DSL & TiVo goes and then makes decision. (Possible)

Overall ENG shareholders will just have to wait and see. No one else is likely to build a big shareholding or make a bid for ENG unless it is trying to wedge SEV (very unlikely)

TiVo is likely to be a winner for ENG but it will take time to be confirmed so it might be in the interest of SEV to let the ENG share price drift and increase its shareholding over time. But this is small peanuts for SEV who are obviously working on a much larger play.

Also SEV could probably buy the rest of ENG now for 22 to 25 cents a share which is only approx $77 to $88 million.

It could then merge UNW and ENG in relative privacy getting the combined entity ready for TiVo and the Chinese Olympics (and now the Tennis and ?) and then the big play with WiMax.

You’d think the combined entity would probably be profitable with all the likely savings.

Given the value of SEV management time and the relatively small value of ENG I’d have to agree with pommie that SEV will mop up ENG and probably sooner than later.

I got no idea what SEV is planning so make up your own mind on this one but if anyone does an opinion about the above I’d love to hear it.