Brisbane-based Over the Wire has entered into a scheme with Aussie Broadband to be wholly purchased for AU$390 million, consisting of AU$344 million in outstanding equity and AU$46 million in debt to be taken on.
Aussie Broadband said buying the 300-employee company would boost its offerings in the cloud, enterprise, security, and government spaces. Over the Wire currently has over 16,000 business, government, and wholesale customers, owns five data centres, and leases 99% of its fibre network. By contrast, Aussie Broadband is connected to all NBN points of interconnect, and has 1,200kms of its fibre in the ground or under construction.
Aussie Broadband said if the deal was completed, it would be able to move its third-party supplied voice services onto Over the Wire's NetSIP voice network that has over 700,000 active numbers.
The deal is expected to produce annual cost savings of AU$8 million to AU$12 million within three years, with combined statutory revenue for the 2021 fiscal year of AU$463 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$51 million to AU$55 million. For the 2022 fiscal year, Over the Wire has forecast EBITDA to hit AU$33 million.
Once the deal is completed, Over the Wire group CEO and managing director Michael Omeros will join the Aussie Broadband board, and Aussie Broadband CTO John Reisinger will depart the board but stay on as a company executive.
Over the Wire shareholders are being offered multiple ways to take on the AU$5.75 per share offer. The default option is AU$4.60 in cash, and in 0.23 Aussie Broadband shares per share, however all cash at AU$5.75 per share or all stock at 1.15 Aussie shares, as well as a mixture of the above is being offered.
Caps have been set on the total amount of cash and shares handed over by Aussie Broadband, at AU$275 million and 39.6 million shares respectively. If one of the caps are hit, adjustments will be made trading each cent for 0.002 Aussie shares, or vice versa.
When it is all said and done, existing Aussie Broadband shareholders will hold between 85% to 94% of the shares in the combined entity.
The deal is expected to close in the first quarter of 2022, and will be funded with existing cash, AU$175 million in new debt, and new shares offered.