Vocus Communications has been successful in its bid to take over Amcom Telecommunications with the pair agreeing to a deal valuing Amcom at $652.7 million.
After entering a trading halt this morning, the two companies have announced plans to merge into one under an agreement whereby Vocus will take the remaining 90 per cent of Amcom shares it does not own. Amcom shareholders will ultimately end up with 51 per cent of the total shareholding of the merged entity.
Under the agreement, Amcom shareholders will receive 0.4614 shares in Vocus for each Amcom share - giving Amcom shares an implied value of $2.45 and a total value of $652.7 million.
The merged entity will create a business with revenue above $300 million and with a market cap of $1.2 billion.
The companies said cost savings of at least $13 million-$15 million per year were identified during the due diligence process, which were expected to come to fruition by the end of June 2017.
In announcing the agreement, Vocus and Amcom also said there were significant revenue synergies from the “expanded and complementary product sets and cross-selling opportunities to respective customer bases”.
The two companies have been in mutual due diligence for the past month after Vocus increased its stake in Amcom to 10 per cent.
Shortly after TPG Telecom increased its shareholding to 6.7 per cent but has not made a formal offer to Amcom.
Following shareholder approval the agreement will be enacted in April 2015, at which time three Amcom directors will join an expanded Vocus board of eight people. Clayton Utz and Lazard are advising Amcom on the deal while Credit Suisse Emerging Companies and Minter Ellison are advising Vocus.
Current Amcom chairman Anthony Grist will become deputy chairman while Vocus chairman David Spence will remain in that role.
Current Vocus chief executive James Spenceley will also continue in that role - displacing current Amcom chief executive Clive Stein.
Mr Stein will remain with the Amcom business following the completion of the transaction to ensure a smooth transition.
Tony Grist said the proposal represented an attractive value outcome.
“The combined businesses are incredibly complementary and the combination will add scale, significant synergy benefits and real value for both companies’ shareholders,” Mr Grist said.
Meanwhile Mr Spence said the deal would enhance Vocus’ positioning to create a national telecommunications infrastructure provider to service commercial, channel and wholesale customers.
