We’re continuing our growth and expansion up Australia’s East Coast with the recent acquisition of LinkOne group. The acquisition will see our wireless network grow further through Melbourne, Sydney and Brisbane, enabling more businesses to access our super-fast Sky-Speed Internet range.
Find out what The Australian had to say about it here. Or read on.
Our Managing Director, Geoff Neate said, “The acquisition of LinkOne brings to Spirit an instant accretive expansion into Brisbane and Sydney and is geographically complementary in Melbourne. This is an exciting acquisition that has been over six months in the making and brings a growing business, managed by a smart team, into Spirit’s stable. This is Spirit’s third network expansion acquisition and will contribute to Spirit’s growth. CEO Todd Maunder will join the Spirit team, focused on network expansion and acquisition and will bring another level of thinking and innovation to Spirit.”
A quick look at the key highlights:
- Acquisition of 100% of the LinkOne Group of Companies (“LinkOne”), including Anttel Communications Group Pty Ltd, LinkOne Pty Ltd, Ignite Broadband Pty Ltd and Wells Research Pty Ltd, for $5.7 million
- Immediate geographic expansion into target markets of Brisbane and Sydney – will allow launch of Spirit’s high speed B2B data services (Sky Speed range).
- Strategically compelling network acquisition, which will allow multi-site B2B data deals to be sold.
- Increases Towers / Points-of-Presence (PoP’s) by c.40%
- Adds 25 reseller partners to allow expanded service distribution of Spirit high speed B2B Services.
- Scales Spirit’s B2B lead generation capabilities across Sydney and Brisbane.
- Access to LinkOne Group’s established network of over 570 clients
- Financially compelling transaction providing ~60% EBITDA uplift
- Implied transaction multiple of circa 5x EV/EBITDA of $1.1 million
- Committed vendors taking 30% in scrip and joining the Spirit team
- The acquisition will be funded via a placement of $4.2 million (at $0.12c) and vendor scrip (at $0.13c), 70% escrowed for 12 months.
So, why LinkOne you ask? Here are the highlights of the business:
- 570 customers, with business customers accounting for circa 90% of revenue
- 44 PoPs, including: 25 in Brisbane, 9 in Sydney and 10 in Melbourne
- Network infrastructure utilises complimentary hardware and co-located Australian data centres
The acquisition of LinkOne is expected to enhance our existing channel partner offering by expanding our presence in Brisbane and Sydney, together with providing a strong platform for ongoing expansion of our network.
LinkOne CEO, Todd Maunder said, “This is an opportunity to take LinkOne to a new level. The synergies between our respective networks enable an immediate upside for our partners. LinkOne’s developed technology places the combined group at the forefront of wholesale enablement with automated service qualification. I am extremely proud of what the LinkOne team has achieved and we look forward to joining Spirit’s dynamic team.”
The financial nitty-gritty – Acquisition of LinkOne & capital raise
We have entered into an agreement to acquire 100% of LinkOne for upfront consideration of A$5.7 million comprising:
- 70% of consideration paid in cash on completion ($4.0 million)
- 30% of consideration paid in scrip ($1.7 million issued at $0.13)
Established in 2008, LinkOne’s network commenced construction in 2015. LinkOne is a wholesale licensed telecommunications carrier operating a predominantly Fixed Wireless network.
To support the acquisition, we received firm commitments to raise A$4.2 million, before costs, through the issue of 35 million Spirit Telecom Shares at $0.12 per share (“Placement”).
The Placement was completed with the support of new and existing institutional, professional and sophisticated investors. The Placement shares will be issued under Spirit’s capacity under ASX Listing Rule 7.1 and Listing Rule 7.1A.
In addition, we will offer all existing eligible investors the opportunity to subscribe for new shares up to a maximum of 125,000 shares (maximum of A$15,000 per investor) under a Share Purchase Plan (SPP). The SPP will be capped at A$1.0 million with a record date of 2nd April 2019 and subject to our discretion to scale back applications.
We expect the LinkOne acquisition to close in late April 2019, subject to the satisfaction of customary closing conditions.
The scrip element of the acquisition will be funded via the issue of approximately 13.1 million Spirit Telecom Shares at $0.13, which represents 30% of the purchase price. These shares will be issued under Spirit’s capacity under Listing Rule 7.1.