Webcentral Group, the remnants of Arq Group that was formerly the company known as Melbourne IT, has received a takeover offer from 5G Networks that beats the AU$12 million deal offered by Siris Capital Group's Web.com brand in July.
The Webcentral board said on Monday the off-market takeover from 5G Networks which would swap 12 Webcentral shares for one 5G Networks share was superior. As part of the offer, 5G Networks would be providing a loan from its existing debt facilities to allow Webcentral to pay off its debts.
At the time of writing, 5G Networks was trading for AU$2.13 a share while Webcentral was at AU$0.11. The equity value of the deal was AU$21.6 million, 5G Networks said, and the implied price per share was AU$0.177.
Last week, 5G Networks raised AU$30 million to potentially fund the purchase, and told shareholders it had already acquired a 10% stake in Webcentral and would not be voting in favour of the Web.com offer. The company said it had previously completed "detailed due diligence" during Webcentral's recent strategic review, and would see AU$7 million in efficiency gains if both businesses were to be combined, which would help Webcentral's profitability.
"The domains and hosting business is complementary to the 5GN offering, with significant opportunities to collaborate to improve profitability for both businesses," 5G Networks said.
Web.com now has five business days to match or beat the new offer. Webcentral said Keybridge Capital, which has a 9.24% interest, would also not be voting for the Web.com deal.
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.
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.
5G Networks said it expects revenue to be in a range of AU$60 million to AU$65 million for the 2021 fiscal year, and EBITDA to be between AU$8 million and AU$8.5 million.