The MOU -- agreed upon on April 13 -- was conditional on eisa's AU$350 million acquisition of OzEmail's Internet residential business being completed. It would have seen f2 pay AU$40 million to acquire a 5 percent equity stake in eisa at AU$2.00 per share.
Nigel Dews, Chief Executive Officer of f2 told ZDNet Australia that the decision was made on the back of "the change in relative prices in Internet stocks and substantial movements on the Nasdaq recently".
Fairfax Chief Executive and Chairman of f2 Fred Hilmer said in an ASX announcement: "Notwithstanding our best efforts over the past several weeks, it has become clear that our proposed deal with eisa cannot be concluded on terms and conditions that are in the best interests of our shareholders."
Hilmer said the eisa deal "was unable to be restructured to our satisfaction. We have therefore exercised our rights to protect our interests by ending the MOU with eisa."
eisa was described by f2 at the time of the MOU as "the most dynamic ISP in the country", but has since seen its market value hurtling southward on the back of the Nasdaq's nosedive. Stock plummeted a massive 21.4 percent from yesterday's close just after this morning's announcement to trade as low as 55 cents -- a shadow of its former March high of AU$2.94.
The terminated MOU will force eisa to look for replacement investment or else jeopardise the ISP's bid for OzEmail. It also increases speculation that investment group Hastings Funds Management and ANZ Banking Group will look to restructure their existing MOUs with eisa.
f2's Dew told ZDNet Australia that further attempts to renegotiate the deal with eisa "was not our intention at the moment".
eisa was unavailable for comment at time of press.
