Australia: When is a blocking stake not a blocking stake in a merger?

Key Points:

Amcom's successful scheme with Vocus demonstrates why communication with target shareholders should be an integral part of any takeover strategy.

Eight months after receiving Vocus' initial approach, Amcom has now implemented its $1.3 billion scrip for scrip merger with Vocus by way of scheme of arrangement.

The merger was the catalyst for a period of major consolidation and activity in the Australian telecommunications sector. The announcement of Amcom's scheme was followed by Vocus' acquisition of a 14.99% stake in Macquarie Telecom, TPG's merger proposal to iiNet, M2's competing proposal for iiNet, TPG's acquisition of a 19.9% stake in Amcom, TPG's superior proposal for iiNet, and Vocus increasing its Macquarie Telecom stake to 16.02%, all of which occurred while Amcom's scheme was on foot.

This significant activity is a reaction to the National Broadband Network and the growth of Telstra, with key driving factors being for participants to increase market share, realise synergies and secure a strong position in the market once the NBN is complete.

Facing a blocking stake

The Amcom scheme process featured a range of complex legal issues, including those resulting from Vocus' acquisition of its substantial stake in Macquarie Telecom and, what would represent a significant challenge to the scheme's success, TPG's acquisition of a 19.9% stake in Amcom.

The challenge from TPG arose from its somewhat unusual public statement, at the time of acquiring its stake, that it intended to vote against the scheme and had no intention to make a counterproposal to the scheme. As the scheme was required to be approved by target shareholders holding at least 75% of the total votes cast on the resolution, TPG's 19.9% holding was considered a "blocking stake" that would ordinarily be very likely to prevent a scheme being successful.

While Vocus held a 10% interest in Amcom and there was nothing at law to prevent it from voting its shares in favour of the scheme, there remained uncertainty if it did vote, as to whether or not those votes would have been eligible to be included in the voting thresholds to approve the scheme.

An outcome of Vocus' divestment of its 10% interest was to remove this uncertainty. The divestment also had the effect of allowing all Amcom shareholders to participate in the scheme so that the market could determine the outcome.

The key then was to encourage Amcom's 8000+ shareholders to cast a vote in relation to the scheme.

Rallying shareholders to vote

Shareholders, and particularly retail shareholders, can tend to be uninterested in actively casting their vote in scheme processes as they have a perception that, while they may support the scheme, their vote will not make a difference. This can play into the hands of holders of significant stakes in the target company.

With the 75% approval threshold and TPG's 19.9% stake, the scheme's success turned on Amcom's ability to rally its, mostly retail, shareholders to cast their vote and hopefully vote in favour of the scheme.

Amcom was already conducting a comprehensive and co-ordinated communications and proxy solicitation strategy with its advisers Lazard and FTI Consulting, with extensive input from Clayton Utz (as Amcom's legal advisers). The strategy became of increased importance with TPG's stated voting intention.

Amcom's communication strategy included:

  • use of social media;
  • video messages to shareholders;
  • sending postcards to shareholders;
  • media interviews, including on the ABC and Sky News;
  • shareholders information lines;
  • call centres contacting Amcom shareholders; and
  • regular contact with custodians, brokers and nominees of shareholders.

Of course, it took a telecommunications company to make use of such diverse communication methods (with similar tactics now ironically being used for iiNet's current scheme with TPG, as noted in the media).

Going into the Amcom scheme meeting, media speculation and the general mood from the market was that the scheme would be voted down.

The result? Amcom shareholders voted in unprecedented numbers, with 88.2% of total shares on issue being voted at the scheme meeting. The support for the scheme was compelling:

  • 77.2% of votes were in favour of the scheme;
  • 3,600 shareholders were in favour, with only 40 against (including TPG); and
  • excluding TPG's votes, 98.8% of votes were in favour.

Following shareholder approval, the scheme was approved by the Federal Court of Australia, and was implemented on 8 July 2015.

Lessons learned

  • Getting the message across: conducting a comprehensive and co-ordinated communications strategy across a range of media avenues assists in encouraging shareholder participation in the vote.
  • Knowing your shareholders: understanding the composition of the register and engaging with retail shareholders, custodians, brokers and nominees should form a key part of any communications strategy.
  • Consistency of communications: caution should be taken to ensure that communications released do not provide information that is material to the scheme other than what has been disclosed in the scheme booklet or other court-approved disclosures.
  • Encouraging but not barracking: a scheme company should be mindful that it can encourage shareholders to cast their vote in relation to the scheme, but cannot tell shareholders how to vote.
  • Independence of the chair: a chair of the scheme meeting should ensure they remain independent, impartial and non-partisan during the scheme process and throughout any communications strategy.
  • Information to all shareholders: communications must be sent to all shareholders and not selectively, so that all those voting have the same information.
  • Contingency planning: while taking all actions towards the success of a scheme, consideration should be given to contingency planning in the event the outcome is uncertain or may be unsuccessful.
  • It's not over until it is over: companies and their advisers should anticipate and be responsive to changing circumstances and challenges and continually revisit and update the communications strategy throughout the scheme process.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.