Digital technology company Webcentral announced $ 2 million in cost synergies per year by announcing that it had entered into a merger with 5G Networks, which would allow it to acquire 100% of 5GN as part of a deal.
Webcentral said in a statement to ASX this morning that the merger, which is expected to result in a 20% increase in EBITDA margin due to the consolidation of the operating platform, aims to diversify the business and strengthen its financial portfolio as part of a broader corporate strategy. to become an ASX300 listed company.
“The combined group will be strongly positioned to grow through acquisition to complement organic growth,” said the ASX press release.
5GN shareholders will receive two Webcentral shares for each 5GN share held under the agreement.
The merger was unanimously recommended to the shareholders of 5GN by a committee of independent directors of 5GN.
Webcentral says the benefits to business growth and shareholder return include:
- simplified capital structure with a group of shareholders that positions the company to target large accretive acquisitions;
- the combined cost synergies estimated at $ 2 million will help generate an EBITDA margin of over 20%;
- accelerating organic revenue growth by streamlining sales channels and introducing complementary services that can be offered seamlessly to existing relationships between SMEs, government, business, wholesale and New Zealand ;
- 100% script offer with 5GN shareholders who should receive 2 Webcentral shares for each 5GN share held. The shareholders of both companies are also expected to benefit from increased levels of commercial liquidity and a better market position; and
- highly experienced and complementary leadership and management teams to drive growth.
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