Vocus Communications has entered into agreements with the shareholders of FX Networks Limited to acquire 100% of the issued capital of the New Zealand fibre provider.
Following a week of speculation, Vocus will acquire FX for an enterprise value of $115.8m with the FX business expected to deliver $13.5-$14.5m of EBITDA in the first 12 months post acquisition (excluding transaction and integration expenses).
FX owns a unique fibre optic network consisting of 4,132 kms of modern ducted fibre cable covering both the North and South Islands of New Zealand, working with 365 customers including 43 of the Top 100 companies in New Zealand.
As a result of the deal, Vocus will emerge as the third largest network operator in NZ and the clear leader in trans-Tasman telecommunications and data centers.
For Vocus CEO, James Spenceley, the combination of Vocus and FX strengthens both businesses.
“FX has built an excellent fibre asset reaching all major population centres across New Zealand," he says.
"There exists an exciting opportunity in New Zealand to mirror the success we have had in Australia as the only integrated provider of fibre, Internet and data centers.
"The FX acquisition adds the missing fibre piece to our existing data center and Internet investment in New Zealand."
The acquisition is fully funded funded via current cash holdings, a new multicurrency senior debt facility with the Commonwealth Bank of Australia and Vocus scrip issued to FX shareholders.
FX shareholders may accept a combination of shares and/or cash (up to a cap of NZ$20.5m). Depending on acceptances by FX shareholders, Vocus will issue between 8.8m – 13.1m shares issued at A$4.40 per share, a 5% discount to the 5 day VWAP and a 1.3% premium to the 30 day VWAP prior to 30 June 2014.
The structure of the financing will provide Vocus with an additional unused debt facility of circa A$40m to continue to seek growth opportunities.
Vocus has received agreements from 77.1% of FX shareholders indicating they will accept the offer and the transaction is expected to complete early Q2 FY2015.
“This transaction allows FX to move to the next phase of its corporate development," adds David Heald, CEO, FX."We have fundamentally completed the build of New Zealand’s most modern fibre network.
"The addition of Vocus’ financial strength and other NZ assets together with a shared culture focused on delivering exceptional outcomes to customers, means this transaction will give a positive outcome for both shareholders and customers alike."