Webcentral and 5G Networks enter into Merger Implementation Agreement under which they will merge by way of a scheme of arrangement.
The Merger Delivers:
- Value creation through a larger entity with enhanced prospects for both organic growth and growth by acquisition;
- Simplification of sales delivery to 330,000 plus customers across Government, enterprise, wholesale and small/medium businesses through a combined online portal;
- Revenue synergies – acceleration of cross sell and up sell opportunities to complementary customer bases, with the combined business having a larger addressable market than the current combined markets;
- Cost synergies estimated at $2M from operating platform consolidation, corporate cost rationalisation and labour synergies to drive a 20%+ EBITDA margin;
- Highly experienced and complementary Board and senior management teams to drive growth;
- Recommended by Independent Board Committees of both 5GN and Webcentral.
- 5GN shareholders to receive 2 Webcentral shares for every 5GN share held. The 2 for 1 ratio is consistent with current trading prices and 5 day and 30 day VWAP (nil premium merger)
- The 5GN Directors intend to vote in favour of the Scheme subject to the Independent Expert concluding that the Scheme is in the best interests of 5GN shareholders and in the absence of a superior proposal
Webcentral Group Limited (ASX:WCG) (Webcentral) and 5G Networks Limited (ASX:5GN) (5GN) are pleased to announce that they have entered into a binding Merger Implementation Agreement under which it is proposed that the two companies will merge (Merger) by way of a scheme of arrangement that is subject to 5GN shareholder approval and court approval in accordance with Part 5.1 of the Corporations Act 2001 (Cth) (Scheme).
The Merger is to be implemented by way of the Scheme, under which Webcentral will acquire 100% of the fully paid ordinary shares in 5GN.
5GN shareholders will receive two Webcentral ordinary shares for each 5GN share held at the Scheme record date and 5GN will become a wholly-owned subsidiary of Webcentral. Upon implementation of the Scheme, 5GN shareholders will hold approximately 52% of the combined entity and Webcentral shareholders will own the remaining 48%.
The 2 for 1 merger ratio is consistent with current trading prices and 5 day and 30 day volume weighted average trading prices:
Independent Board Committees
The 5GN directors have established a committee of independent directors (5GN IBC), consisting of all 5GN directors except Joe Demase and Joe Gangi (due to their interests in Webcentral), to evaluate the terms of the proposed Scheme, reach an independent conclusion on whether the Scheme is in the best interests of 5GN shareholders, and make an independent recommendation to 5GN shareholders on how to vote on the Scheme.
The Webcentral directors have also established a committee of independent directors (Webcentral IBC), consisting of all Webcentral Directors other than Joe Demase.
Both the 5GN IBC and the Webcentral IBC have recommended the Merger.
5GN Directors intend to vote in favour of the Scheme All 5GN directors intend to vote the 5GN shares held or controlled by them in favour of the Scheme subject to the Independent Expert concluding that the proposed Scheme is in the best interests of 5GN shareholders and in the absence of a superior proposal.
Webcentral 5GN Ratio
Closing Price 14 July 2021 $0.46 $0.93 2.0
5-day VWAP to 14 July 2021 $0.46 $0.94 2.0
30-day VWAP to 14 July 2021 $0.44 $0.93 2.1
Details of the Merger Implementation Agreement
The Merger Implementation Agreement contains customary terms and conditions on which Webcentral and 5GN will implement the Scheme.
The implementation of the Scheme remains subject to certain terms and conditions including but not limited to:
- 5GN shareholder approval;
- Court approval;
- The Independent Expert concluding that the Scheme is in the best interests of 5GN shareholders;
- Webcentral shareholder approval of a reverse takeover resolution under ASX Listing Rule 7.1 and the acquisition of related party shares under ASX Listing Rule 10.1 at a Webcentral EGM; and
- No material adverse change or prescribed occurrence (as each defined in the Merger Implementation Agreement) affecting either party.
Under the Merger Implementation Agreement, Webcentral and 5GN are each bound by customary exclusivity provisions including no talk and no shop (subject to customary exceptions that enable the directors of Webcentral and 5GN to comply with their respective fiduciary or statutory obligations), no shop and notification obligations and matching rights in the event of a competing proposal. Webcentral and 5GN have also agreed reciprocal break fees of $0.5 million in certain circumstances.
A full copy of the Merger Implementation Agreement, including all applicable conditions, is attached to this announcement.
Indicative Timetable and Next Steps
5GN shareholders do not need to take any action in relation to the Merger at this stage.
The scheme booklet containing information relating to the Merger, the Independent Expert’s report on whether the Scheme is in the best interests of 5GN shareholders, the reasons for the 5GN independent directors’ recommendations and details of the scheme meeting is expected to be sent to 5GN shareholders by September 2021. 5GN intends to appoint PKF Melbourne Corporate Pty Ltd as the Independent Expert.
5GN shareholders will be given the opportunity to vote on the Scheme at the scheme meeting which is expected to be held in October 2021. Subject to 5GN shareholder approval being obtained by the requisite majorities and the other conditions of the Scheme being satisfied, the Scheme is expected to be implemented in October or early November 2021.
These dates are indicative only and subject to change.
Advisers
Webcentral is being advised by Cornwalls as legal counsel.
5GN is being advised by Norton Rose Fulbright as legal counsel.
This release has been authorised by the directors of Webcentral Group Limited and 5G Networks Limited and by the 5GN IBC and the Webcentral IBC.
About Webcentral
Webcentral is an Australian owned digital services company who empower more than 330,000 customers to grow and thrive in the online world. Our portfolio of digital services is extensive, with market leading offers across domain management, website development and hosting, office and productivity applications and online marketing.
Our customer focussed heritage has been built on expertise, innovation and personalised service; critical attributes delivered through our culture and embraced by our people. This is demonstrated through more than 25 years of online industry leadership across Australia’s digital foundation brands such as Melbourne IT, Netregistry and WME.
