5GN announces $30m share placement, joins race to acquire Webcentral

Data centre operator 5G Networks (ASX:5GN) has announced a new $30m share placement, with plans to get back on the acquisition trail.

The company said the funds will be used to potentially fund the acquisition of digital services company Webcentral (ASX:WCG).

Shares in both companies went into a trading halt just before 10am EST. WCG shares were around 13 per cent higher in pre-market trade while 5GN shares fell by around three per cent.

Bolt it on

Should the deal with WCG not eventuate, 5GN has “a range of other potential acquisitions which would constitute highly accretive M&A opportunities in its pipeline”, the company said.

The new capital raising marks a continuation of 5GN’s strategy to grow by acquisition, and follows a recent $2.9m deal to acquire the assets of telecom network operator ColoAU.

Webcentral has a market cap of $13.4 million and has been in the sights of a number of companies lately.

In mid-July, US-based internet company Web.com Group offered $12.2 million for Webcentral’s ASX shares.

Correspondence from WCG released to the ASX on 28 August showed that the company’s board was still unanimously in favour of the deal, after an independent expert was brought in to assess whether the Scheme was fair and reasonable

Having regard to Webcentral’s H1 2020 financial results, the experts (BDO Corporate Finance (WA) Pty Ltd) maintained their conclusion the scheme was fair and reasonable, with the “full underlying value of Webcentral at between $0.083 and $0.126 per share”.

The 5GN announcement follows a separate $18.2m placement the company successfully completed in June.

The June placement was fully subscribed at $1.23 per share. Since then, 5GN’s stock price has risen above $2 and today’s $30m offer was priced at $1.85.

In a presentation accompanying today’s announcement, the company said it was positioned with post-COVID tailwinds as a data centre infrastructure provider, given the accelerating shift to digital services.

The company said it had a “proven track-record of completing and successfully integrating acquisitions since 2017, and remains focused on synergistic and accretive M&A opportunities”.