Web.com ups Arq Group leftovers bid to just shy of AU$19 million in cash

Better than its previous AU$12 million offer and all in cash.
Written by Asha Barbaschow, Contributor

Webcentral Group, the remnants of Arq Group that was formerly the company known as Melbourne IT, has received a revised takeover offer from Siris Capital Group's Web.com.

In July, Web.com offered Webcentral AU$0.10 per share, approximately AU$12 million. It upped that offer on Tuesday to AU$0.155 per share, AU$18.9 million, with the amount to be paid in cash.

While the offer is a 55% improvement on its first bid, 5G Networks offered Webcentral AU$21.6 million just last week.

A week prior to putting in its offer, 5G Networks had raised AU$30 million to potentially fund the purchase, telling shareholders at the time it had already acquired a 10% stake in Webcentral and would not be voting in favour of the Web.com offer. Webcentral said Keybridge Capital, which has a 9.24% interest, would also not be voting for the Web.com deal.

5G Networks 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.

5G Networks gave Web.com five business days to match or beat the new offer.

"The improved proposal is the only certain cash proposal for Webcentral shares, and offers short-term liquidity and a certain cash outcome for all Webcentral shareholders," Web.com's Tuesday statement read.

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.

At the time of writing, Webcentral was trading at AU$0.16 per share.


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