Internet service provider (ISP), iiNet, has entered a binding agreement to purchase Adam Internet Holdings and associated companies for $60 million cash consideration.
Adam Internet is an Adelaide-based ISP servicing residents, businesses and government departments in South Australia (SA) and the Northern Territory. It has about 70,000 broadband subscribers, as well as key SA business and government clients consuming datacentre, hosting and Cloud services.
The acquisition takes iiNet’s total customer base to more than 900,000 broadband subscribers. It will also grant it a new datacentre and additional DSLAM and fibre network infrastructure.
In addition, iiNet said it has the opportunity to increase the bundled product offering to Adam Internet customers from its existing product suite.
iiNet expects to generate financial year 2014 revenue of $55 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $11.5 million from the acquisition, with synergies mainly expected from the 2015 financial year and onwards.
The acquisition is also expected to be immediately EPS accretive from FY14 (pre-synergies).
According to iiNet CEO, Michael Malone, the agreement solidifies the company’s status as Australia’s second largest DSL ISP, and the leading challenger in the telecommunications market.
“Like iiNet, Adam Internet has a loyal customer base and strong reputation in its core markets,” Malone said. “This acquisition further builds on our strategy to grow scale in the national residential and business broadband segments.”
The deal is subject to a number of standard procedural conditions which are expected to be met by August 31. The Australian Competition and Consumer Commission (ACCC) has cleared the transaction.
iinet is being advised by Azure Capital Limited, with legal advice being provided by K&L Gates and Herbert Geer.
iiNet will release its financial year 2013 results on August 21.