The operators plan to combine their assets in an all-stock deal that will see M2 shareholders receive 1.625 Vocus shares for each M2 share they hold.
Advertisement
The two merged companies will be valued at more than $3 billion, creating the fourth biggest vertically aligned telco in the Australian market and third in New Zealand.
After the merger, M2 shareholders will own 56 percent of the combined company, which is expected to be eligible to sit in the S&P/ASX 100 index. Subject to the conditions of the scheme being satisfied, the Scheme Implementation Date will be early 2016.
In a statement this morning, M2 said its board of directors unanimously recommended shareholders back the deal, in the absence of any superior proposal and pending the report of the independent expert.
“The merger of Vocus and M2 is a compelling opportunity for all shareholders”, Vocus chairman David Spence said.
“Both have successful track records of creating substantial value for shareholders and, together, we will retain this focus”.
Vocus had the infrastructure to kick start a new phase of growth at M2, but in order to get the deal done, it had to cover the recent losses in M2’s market value.
Melbourne-based M2 is a fast-growing provider of a range of communication, utility and insurance services in Australia and New Zealand.
“The ACCC has warned that it will carefully scrutinise future mergers between major players”.
The wave of consolidation in the telecommunications sector continues, with Vocus Communications and M2 Group inking an agreement to merge into a single $3 billion company and become Australia’s fourth-largest telco. There will be synergy benefits as well, around $40 million per annum according to the presentation, with the combined group able to cut out some redundant costs post-merger.
Sydney-based Vocus is a leading provider of data centre, dark fibre and internet across Australia, New Zealand and the US.
M2 Group chairman, Craig Farrow, added that it was a vertical integration of two different telco businesses and he didn’t anticipate too many problems with either the ACCC or New Zealand’s Commerce Commission.
Advertisement
It has been a busy year so far for Vocus, which agreed to buy out network operator Amcom in late 2014 and spent the first six months of 2015 fighting off a challenge from TPG.
