New York private equity firm scoops up Arq Group leftovers for AU$12m
Webcentral Group, formed in May following a rebranding of Arq Group, and was formerly Melbourne IT prior to that, has announced it will be acquired by Web.com, which is wholly owned by an affiliate of Siris Capital Group, a private equity firm based in New York.
The deal will see the Australian company be scooped up for approximately AU$12.2 million.
"Webcentral's customers will benefit from the increase in global scale to deploy unique, simple, and innovative online solutions, as well as a broader product suite and service capability," Webcentral chairman Andrew Reitzer said.
Arq Group sold its name in February, alongside the company's Enterprise Services Division for a total of AU$35 million. The sale of its enterprise business left the company with only its SMB Division, which was then known as Webcentral following the company's annual general meeting in May.
The gross cash proceeds of the sale was AU$29 million as Arq needed to make a final payment of AU$6 million to the vendors of InfoReady Pty Limited, which it acquired in 2016.
At the time, the company sold its international domain name business to fund the InfoReady purchase.
The company in February said the final net proceeds would be subject to adjustments for net debt items, working capital, and insurance cover. The company added that the net proceeds of the sale would be applied to reduce its debt.
Prior to that, the company said it had been searching for ways to reduce its debt, announcing a review by Macquarie Capital to "explore all avenues for shareholder value creation" in September last year.
In delivering its financial results in late February, the company said it was also progressing discussions with interested parties for the sale of its SMB division, and that it had received several non-binding letters of indicative proposals.
"Unfortunately, the impact of COVID-19 on capital and debt markets have slowed this process, however, I feel we are nearing the end soon," Reitzer said at the time.
Prior to being renamed to Arq Group in 2018, the company was known as Melbourne IT. The company at the time had touted the name change as allowing it to be a "full-service digital partner".
For the first half of 2020, the company recorded a net loss after tax of almost AU$129 million.
The company claimed underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of just over AU$12 million from continuing operations for the six months to December 2019. However, reported EBITDA was a AU$31 million loss.
Revenue for the reported period was AU$83.6 million, down from the AU$100 million revenue generated a year prior.
Subject to the various approvals, Webcentral is expected to be gobbled up by October 2020. Web.com said it received confirmation from the ACCC that it would not oppose the sale.
Web.com has assumed Webcentral's existing debt facilities as part of the deal.
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