iiNet acquires Netspace for $40m
iiNet Limited (IIN) announced that it as entered into a binding agreement to acquire Netspace for $40 million. The company said the acquisition would lift its fixed line broadband market share to 12.4%, towards its 15% target, with an increase of over 70,000 broadband customers to more than 520,000 broadband customers, and an increase of over 120,000 active services to around 920,000 total active services.
iiNet said the acquisition would be EPS accretive (pre-synergies) from the first full year.
The company expects Netspace to generate over $70 million of revenue and $8 million of EBITDA in FY11 before synergies.
CEO, Michael Malone, said Netspace is a natural fit for the company given the strong alignment of the companies’ products, networks and cultures.
“It is a great business, having grown strongly in the residential market, and has a loyal customer base given its customer service focus,” M Malone said.
“In addition, the geographic footprint of Netspace is very complementary to iiNet, extending our presence in the key markets of Victoria, New South Wales, and Tasmania.”
The company expects to realise significant potential synergies, including $2 million in the first year and $5 million in the second year of iiNet’s ownership, through the migration of Netspace customers to iiNet’s network and through lower bandwidth costs.
iiNet said the acquisition consideration would be 100% debt fund, with completion expected to be achieved by 30 April 2010.
As at 1346 AEDT, iiNet shares were up 15c to $2.60.
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