Wednesday, 29 June 2016 11:12

Vocus to buy Nextgen for $807 million Featured

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Vocus Communications is set to buy fibre network owner Nextgen in a deal worth $807 million.  

The deal will see Vocus pick up Nextgen's backhaul assets, including the North West Cable System (NWCS) and Australia Singapore Cable projects.

Vocus will fund the acquisitions with a $652 million capital raising, and in a statement to the ASX has announced a retail offer of $452 million and an institutional placement of around $200 million.

Vocus expects the deal will be completed within three months and says the acquisition of Nextgen significantly enhances its fibre infrastructure footprint in Australia and is a strategic fit.

The proposed sale is subject to ACCC clearance and other regulatory conditions.

The Nextgen Group is owned by the Ontario Teachers’ Pension Plan (71%) and CIMIC Group Limited (29%), and both OTPP and CIMIC Group will retain ownership of  Metronode after the sale.

Vocus CEO, Geoff Horth, said the acquisition of Nextgen "greatly enhances Vocus’ existing infrastructure network.Owning this critical infrastructure will allow Vocus to connect its metropolitan infrastructure to Nextgen Networks’ inter-capital fibre optic network, connecting mainland capital cities to each other and to regional and remote areas on one owned network.

"In addition, the acquisition of NWCS provides significant near-term upside to expand Vocus’ owned network offering.These acquisitions represent a compelling opportunity for Vocus shareholders and strengthens our position as the 4th pillar in Australian telecommunications.”

The deal includes Nextgen’s 17,000-km national fibre network, the almost‐completed subsea Port Hedland to Darwin cable and the proposed Perth to Singapore subsea cable.

Nextgen will continue to own its data centre provider Metronode, which operates as a separate entity, and has 10 facilities in Perth, Melbourne, Sydney, Wollongong, Canberra, Brisbane and Adelaide.

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Peter Dinham is a co-founder of iTWire and a 35-year 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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