PERTH: Over the Wire Holdings Limited has entered into a binding agreement to acquire all of the shares in Digital Sense Hosting Pty Ltd, a news release said.
Completion is expected to take place on 30 October 2020 and is subject to a limited number of customary conditions precedent.
Headquartered in Brisbane and employing approximately 40 staff, Digital Sense is a high-quality cloud business that provides a customisable and scalable cloud offering to Enterprise and Government customers.
Upfront consideration of $27.0m comprises $21.6m in cash plus $5.4m in Over the Wire shares (at $3.64 per share, being the 10 day VWAP at signing of the LOI). The cash component is fully funded by an institutional placement of $20.0m (priced at $4.00 per share) and existing cash.
The shares issued as consideration to the executive shareholders of Digital Sense will rank equally with existing Over the Wire shares and will be subject to voluntary escrow in full until 30 June 2021 and 50% until 30 June 2022.
The executive shareholders of Digital Sense are entitled to receive further deferred consideration of up to $12.0m (up to $7.0m in FY21, and up to $5.0m in FY22) based on achieving agreed targets, which include a mix of retention (key staff and key clients) and growth targets based around revenue and EBITDA. With revenue of approximately $18.3m and EBITDA of approximately $5.4m for the 12 month period to 30 June 2020, upfront consideration of $27.0m represents a valuation of 5 times historical FY20 EBITDA.
Over the Wire has funded the acquisition by raising $20.0m through a placement of 5 million shares to institutional and sophisticated investors at $4.00 per share (representing a 3.4% discount to the 10 day VWAP). Morgans Corporate Limited and E. L. & C. Baillieu Limited were Joint Lead Managers to the Placement, which was heavily oversubscribed.
Over the Wire Holdings Limited (ASX: OTW) is an ASX listed telecommunications, cloud and IT solutions provider that has a national network with points of presence in all major Australian capital cities and Auckland, NZ.
The company offers an integrated suite of products and services to business customers including Data Networks and Internet, Voice, Data Centre co-location, Cloud and Managed Services. Over the Wire Holdings Limited companies include Over the Wire, NetSIP, Faktortel, Sanity Technology, Telarus, VPN Solutions, Access Digital Networks, Comlinx, Zintel Communications and Fonebox.
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