Webcentral Group Limited (ASX:WCG) and 5G Networks Limited (ASX:5GN) have entered into a binding Merger Implementation Agreement under which it is proposed that the two companies will come together by way of a scheme of arrangement.
The Merger is to be implemented by way of the Scheme, under which Webcentral will acquire 100% ofthe fully paid ordinary shares in 5GN. 5GN shareholders will receive two Webcentral ordinary shares for each 5GN share held at the Scheme record date and 5GN will become a wholly-owned subsidiary of Webcentral.
Upon implementation of the Scheme, 5GN shareholders will hold approximately 52% of the combined entity and Webcentral shareholders will own the remaining 48%. The 2 for 1 merger ratio is consistent with current trading prices and 5 day and 30 day volume weighted average trading prices.
The company’s said the merger delivers:
- Value creation through a larger entity with enhanced prospects for both organic growth and growth by acquisition;
- Simplification of sales delivery to 330,000 plus customers across Government, enterprise, wholesale and small/medium businesses through a combined online portal;
- Revenue synergies with an acceleration of cross sell and up sell opportunities to complementary customer bases, with the combined business having a larger addressable market than the current combined markets;
- Cost synergies estimated at $2M from operating platform consolidation, corporate cost rationalisation and labour synergies to drive a 20%+ EBITDA margin;
- Highly experienced and complementary Board and senior management teams to drive growth;
- Recommended by Independent Board Committees of both 5GN and Webcentral.
Webcentral Group, formerly known as Melbourne IT Group, is an Australian digital services provider. Since 1996 it has worked with more than 300,000 individuals and companies to launch their business idea, build a presence online and capitalise upon the constantly evolving opportunities in the digital technology space. We are passionate about, and driven by, the success of our customers’ business.
5G Networks is a licenced telecommunications carrier operating across Australia.