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Vonex says Nextel acquisition will be highly accretive - TechInvest Magazine Online

Written by Staff Writers | Dec 21, 2020 8:24:48 AM

Telecommunications innovator Vonex Limited (ASX: VN8) has entered into a binding term sheet with Nextel Pty Ltd to acquire Nextel’s business and operations as a going concern.

Nextel, a provider of telecommunications services to business customers, is recognised as an industry leader in the design, installation and maintenance of voice, data and communications networks.

Nextel has grown since 1990 to become a meaningful single-source provider to businesses not just in structured cabling, telephony systems and electrical fit outs, but also in rolling out fibre, RFID and wireless networks to large-scale projects.

Headquartered in Sydney and with offices in Brisbane and Melbourne, Nextel’s national footprint allows the group to service businesses in remote locations. Its professional services team has rolled out systems from micro 4-5 handset users up to 1,000-end enterprise users.

Nextel brings long-term relationships with tier-1 carriers, network partners and customers spanning a range of industries, including LJ Hooker, Endemol Shine Australia, 4 Pines Brewing Co, Lifeline and the Sydney Harbour Federation Trust.

The acquisition is subject to Vonex completing legal and financial due diligence to its satisfaction, which is likely to complete prior to 29 January 2021, and to Vonex not receiving notification from the ASX that Listing Rule Chapter 11 applies to the acquisition.

Total consideration for Nextel’s business and operations is approximately $1.575 million, payable on completion of the transaction.

The consideration brings Nextel’s goodwill, staff and equipment, intellectual property, wholesale contracts with several major telecommunications companies, all end user customers being serviced by Nextel, stock and no debt.

Vonex Managing Director, Matt Fahey, said the acquisition will provide an immediate boost of approximately $1 million to the Company’s base of annualised recurring revenue (ARR).

He added that the conservative cash component of the total consideration helps to preserves Vonex’s cash position, while also highlighting the belief that the Nextel vendors have in Vonex continuing to grow the combined businesses and generating attractive returns for shareholders.

We are delighted to welcome Nextel to the Vonex group. Acquiring Nextel represents an ideal fit within our established M&A strategy, through which we focus on gaining scale in attractive markets while adding value for customers by expanding our cross-selling range of telco products and services,” Mr Fahey said.

“In Nextel, we see many of Vonex’s existing characteristics in terms of capability and culture, which provides us with confidence that we can integrate the business quickly and simply. The acquisition of Nextel’s established operations will provide an instant expansion of the company’s customer base, particularly in the key NSW market, and will be highly earnings-accretive.

“With a strong debt-free balance sheet and supportive institutional shareholders, Vonex is increasingly well-positioned to gain scale as we continue to execute our three-pillar growth strategy across Retail, Wholesale and Acquisition. We look forward to growing more rapidly and profitably as we integrate Nextel’s operations into Vonex’s fast-growing existing business.”

https://vonex.com.au/