Aussie Broadband has made a formal proposal to buy Over The Wire for $344 million, to be paid out in a mix of cash and shares.
The terms of the purchase at a high level are much the same as was revealed in late October when the proposed purchase was first reported.
OTW shareholders are being offered all cash, all scrip, or a combination of the two, in exchange for their shares.
Aussie Broadband has set a maximum cash component to the transaction of $275.2 million and a maximum scrip consideration of 39.6 million of its own shares.
It intends to fund the transaction through the issuance of these new shares, together with existing cash, new debt facilities totalling $175 million, a bridging facility - if required, and a “new working capital facility”.
Aussie Broadband’s co-founder and managing director Phillip Britt told iTnews that OTW’s tier 1 voice network, and cloud and security services, were particularly attractive.
“Aussie Broadband’s strength is obviously our network, fibre assets and controlling the network end-to-end; OTW’s strengths include that they’ve built a tier 1 voice network, and they control the experience over that,” Britt said.
“Combining those elements together is one part, so we see the voice element being a key strategic piece.
“The other key strategic piece is OTW’s cloud and security business. They’re things that Aussie Broadband doesn’t have today.
“The uniqueness is in the voice, cloud and security piece when the two [businesses] come together.”
All of these elements are intended to be added to Aussie Broadband’s Carbon platform, which enables enterprises to self-serve a variety of connectivity and some IT-based services.
“We see the voice element coming into Carbon in a big way and we also see the ability to expand into the security and cloud piece as well,” Britt said.
“We envisage Carbon becoming a full service offering for all business and enterprise communications and IT needs.”
The total equity value of the OTW transaction is $344 million while the implied enterprise value is $390.4 million.
The enterprise value figure includes Aussie Broadband taking on net debt of $46.4 million.
Aussie Broadband said in a statement that “annual cost synergies” of between $8 million and $12 million are anticipated within three years.
Britt said he had spent “several weeks… getting to know [OTW’s] senior team”.
OTW’s current managing director and group CEO Michael Omeros will join the board once the transaction is completed.
He will replace John Reisinger, who will step down as a director but will remain a senior executive at Aussie Broadband.