Vocus agrees to buy FX Networks for $115.8M including debt, paying cash, shares
By Jonathan Underhill
July 2 (BusinessDesk) - Vocus Communications, the ASX-listed telecommunications company, agreed to buy FX Networks for $115.8 million including debt, gaining a New Zealand fibre optic cable network operator it says will add to earnings in its first year. Vocus shares jumped to a record on the ASX.
Vocus will pay $62 million, with up to 33 percent paid in cash and the balance in new Vocus shares, and assume $53.7 million of debt, the company said in a statement to the ASX. That would see it issue between 8.8 million and 13.1 million Vocus shares at a price of A$4.40 apiece.
Based on results for calendar 2013, the acquisition would have more than doubled Vocus's annual revenue to A$136 million and lifted earnings before interest, tax, depreciation and amortisation to A$36.7 million. FX Networks made a net loss of A$900,000 last year because of interest costs from a related party debt, according to a Vocus presentation on the deal.
"There exists an exciting opportunity in New Zealand to mirror the success we have had in Australia as the only integrated provider of fibre, internet and data centres," Vocus chief executive James Spenceley said in a statement. "The FX acquisition adds the missing fibre piece to our existing data centre and internet investment in New Zealand."
Vocus would fund the acquisition through a combination of existing cash, a debt facility with Commonwealth Bank of Australia and Vocus scrip and will end up with about A$40 million of unusued debt facility it may use "to continue to seek growth opportunities."
Shares of Vocus rose about 6 percent to A$5.05 on the ASX, valuing the company at about A$439 million, and have surged 45 percent this year. The shares are rated a 'buy' based on seven analysts polled by Reuters.
FX Networks owns and operates a national inter-city fibre optic network in New Zealand and has more than 3,000 clients, according to its website. The company has laid 4,200 kilometres of fibre and has 29 Tb of national capacity, it says.