Monday, 08 October 2018 11:43

MNF Group to buy Inabox in deal worth up to $33.5 million Featured

By
MNF Group CEO Rene Sugo MNF Group CEO Rene Sugo

Australian-listed telecommunications software and services provider MNF Group is set to acquire managed IT cloud and telecommunications services company Inabox Group in a deal valued at between $30.5 million and $33.5 million.

MNF Group (ASX: MNF)announced on Monday it had entered into an agreement to acquire the wholesale and enablement business from Inabox Group (ASX: IAB), which provides services to more than 500 wholesale customers throughout Australia.

MNF says it will pay for the acquisition in cash subject to all earn out conditions being met and final calculation of working capital.

And, based on normalised FY18 performance, the MNF board anticipates the acquisition to generate revenues of $55 million and approximate EBITDA of $4.2 million before potential synergies and savings.

MNF says the initial purchase price will be funded through an extension of its existing revolving acquisition facility, while the earn out components are expected to be funded with free cash flow.

Completion of the deal is expected on 30 November, subject to a number of conditions, including approval from Inabox shareholders.

“IAB performs a leading role in the Australian wholesale telecommunications market and brings considerable volume and scale to the MNF business,” said MNF Group chief executive Rene Sugo.

“The company is also recognised as the leading provider of SaaS enablement services to the industry – strongly complementing the MNF business.”

Here’s MNF’s summary of the proposed acquisition:

A $3.0m earn out that is subject to the successful commercialisation of recently procured enablement service offerings payable in three tranches:

  • Tranche 1 – $0.5 million payable in March 2019
  • Tranche 2 – $1.65 million payable in June 2019
  • Tranche 3 – $0.85 million payable in June 2019
  • Target working capital on completion of $2.0 million, that is expected to include $1.5 million in cash.
  • The acquired business will be debt-free.

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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