Webcentral said in a statement to the ASX this morning that the merger, which it expects to drive a 20% increase in EBITDA margin as a result of operating platform consolidation, aims to diversify the business and bolster its financial portfolio as part of a broader corporate strategy for becoming an ASX300 listed company.
“The combined group will be strongly positioned to grow by acquisition to complement organic growth,” the ASX statement said.
5GN shareholders will receive two Webcentral shares for every 5GN share held under the arrangement.
The merger has been unanimously recommended to 5GN shareholders by a committee of 5GN independent directors.
Webcentral say the benefits for business growth and shareholder return include:
- simplified capital structure with one group of shareholders which positions the company to target large accretive acquisitions;
- combined cost synergies estimated at $2 million will help to drive a 20%+ EBITDA margin;
- acceleration of organic revenue growth by streamlining sales channels and introducing complementary services that can be seamlessly offered to existing relationships across SMB, Government, enterprise, wholesale and New Zealand;
- 100% scrip offer with 5GN shareholders expected to receive 2 Webcentral shares for every 5GN share held. Shareholders from both companies are also expected to benefit from increased levels of trading liquidity and an enhanced market position; and
- highly experienced and complementary Board and senior management teams to drive growth.