SYDNEY: NEXION Group Ltd has entered into an agreement to acquire 100% of the issued share capital of Blue Sky Telecom Pty Ltd, a news release said.

Acquisition forms part of NEXION Group’s expansion strategy outlined in the Company’s recent Prospectus, specifically acquiring local ICT service providers that bring relevant skills and expertise to the group as well as the opportunity for accelerated growth.

At its core the Acquisition is about combining products and infrastructure to create a class leading full-service telecommunications Company and the revenue synergies that can be expected to result from this.

The Acquisition creates strong growth opportunities through the combination of Blue Sky’s telecommunication services at the “edge” of the customers’ networks being bonded to the core SD-WAN and Hybrid Cloud network being rolledout by NEXION.

Blue Sky delivers voice, data and media services to end-users and has a particular focus on mine-site camps.

NEXION Networks delivers a wholesale data hosting and core local, national and global inter-connect network. The combination of the two businesses is complementary by expanding demand for NEXION’s core services and reducing the delivery cost of Blue Sky’s products.

NEXION’s strength lies in the significant infrastructure assets it has developed over the last four years to create NEXION OneCloud.

Blue Sky will be a key route for customers to access NEXION Network’s global Hybrid Cloud offering, by seamlessly interconnecting all of Blue Sky’s “Edge” products and services, into one easy to deploy Hybrid Cloud enabled full stack offering.

Consideration for the Acquisition consists of the following:

•upfront consideration of 10,000,000 ordinary shares in NEXION;

•deferred consideration of:

• Tranche 1 -that number of Shares, with a deemed issue price of $0.20 each, equal to the deemed value of Blue Sky’searned revenue achieved in FY21 that exceeds $2M;
• Tranche 2 -that number of Shares, with a deemed issue price of 70% of the Company’s 3 month volume weighted average price (‘VWAP’) from 1 April 2022 to 30 June 2022,equal to the revenue achieved in excess of the 110% of the FY21 number capped at $9M;
• Tranche 3 -that number of Shares, with a deemed issue price of 70% of the Company’s 3 month VWAP from 1 April 2023 to 30 June 2023, equal to $2M upon the achievement of Blue Sky Telecom exceeding$12M revenue in FY23; and
• Tranche 4 -that number of Shares, with a deemed issue price of 70% of the Company’s 3 month VWAP from 1April 2024 to 30 June 2024, equal to $2M upon the achievement of Blue Sky Telecom exceeding$24M revenue in FY24,(collectively the ‘Consideration Shares’).

NEXION Co-Founder and Group CEO, Paul Glass commented: “We are extremely pleased to announce this acquisition. Blue Sky is a fast growing business with an outstanding product offering. As a result, NEXION will be a stronger combination of infrastructure and products that should yield material cross-sell opportunities and the possibility of lower costs.

The business, much like NEXION Networks is underpinned by a focus on recurring revenue and long term contracts. This alignment is key to the NEXION Group growth strategy as we focus on long term shareholder value in a recuring revenue focussed group.

The terms of the acquisition have been designed to strongly align the vendor with NEXION’s ongoing success and should the terms of performance milestones be met all shareholders can be expected to benefit strongly in coming years as NEXION’s revenue will have grown very significantly. We are very pleased to be working with Blue Sky’s Founder, Daniel Fairbairn and I look forward to working together with him going forward to deliver growth. Finally, it has been a key objective of the Company to materially improve the proportion of Recurring Revenue in NEXION’s revenue mix and this acquisition is a huge step towards this goal.”

Blue Sky Founder and CEO, Daniel Fairbairn commented: “By bringing these two businesses together under the NEXION Group, the Company will be able to leverage and combine their respective in-depth expertise and ability to build commercial solutions that adds real value to our customers.

I am very committed to replicating Blue Sky’s historical success and creating an even stronger commercial proposition for our customers and generating strong returns for NEXION shareholders. The NEXION Networks team have a proven record on delivery and it’s great to be a part of this group of executives”.

NEXION is an information technology service provider that offers compute and data storage equipment as a service that it integrates with Public Cloud services to form a Hybrid Cloud. NEXION Networks Pty Ltd (NEXION Networks) owns and operates Hybrid Cloud infrastructure and provides associated services while NEXION W1 Pty Ltd (NEXION W1) owns and operates a 3 Mega-watt capacity data centre in Perth, Western Australia.

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