Webcentral and 5G Networks move to merge

Webcentral Group and 5G Networks (5GN) are gearing up to merge, with both companies entering into a binding implementation agreement to make the move before the end of the year. 

Although subject to 5GN shareholder approval, the deal is anticipated to be implemented by early November at the latest. Under the agreement, Webcentral would acquire 100 per cent of the shares in 5GN, with the telecommunications carrier becoming a wholly owned subsidiary of Webcentral. 

According to a statement lodged with the Australian Securities Exchange (ASX) on 16 July, the proposed merger would simplify sales delivery to over 330,000 customers.

In addition, the merged entity is also expected to generate revenue of $110 million to $120 million, cost synergies of $2 million and an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of over 20 per cent. 

5GN shareholders would receive two Webcentral shares for every one 5GN share they hold, with 5GN shareholders to end up owning approximately 52 per cent of the combined entity and Webcentral shareholders to own the left over 48 per cent. 

Both businesses have established independent board committees (IBCs) consisting of directors from each company to evaluate the proposed scheme.

These IBCs however will not include Joe Demase from either committee, as he is currently the managing director of both businesses, and Joe Gangi from Webcentral’s IBC, as he is its non-executive chairman. 

Both IBCs recommend the agreement, with 5GN’s statement claiming its directors intend to vote in favour of the merger. 

The proposed merger is the latest instalment in the extensive history of Webcentral and the telecommunications carrier, following the digital services providers’ acquisition by 5GN after a bidding war with Web.com in September 2020, which in turn resulted in persistent resistance from shareholder Keybridge Capital. 

It also comes over a week after Webcentral amalgamated its Netregistry and WME brands, placing the combined entity under the Webcentral name in an attempt to both improve and simplify the customer experience.