US-based technology services company Web.com Group is to acquire the beleaguered Arq Group for around $12.2 million.
Now known as Webcentral Group following a company rebrand, the small-to medium-sized business (SMB) digital services firm will now form part of Web.com's continued expansion into Australia.
The deal would see Web.com acquire all of Webcentral’s shares at $0.10 per share in cash in a scheme of arrangement, according to a statement posted to the Australian Securities Exchange (ASX).
Consisting of Netregistry, WME, Melbourne IT and Domainz, Webcentral was previously known as Arq Group from April 2018 up until late June 2020.
Web.com CEO and president Sharon Rowlands said acquiring Webcentral will help the US group expand its footprint in Australia following a previous acquisition of the domain, hosting and technology solutions provider Dreamscape Networks in 2019.
Webcentral chairman Andrew Reitzer said the deal would see its customers “benefit from the increase in global scale to deploy unique, simple and innovative online solutions, as well as a broader product suite and service capability”.
The agreement was unanimously accepted by Webcentral’s directors, with Reitzer claiming the deal gives shareholders “an immediate cash value for their investment and represents an attractive premium to the prevailing trading price of Webcentral shares”.
“I would like to thank the Webcentral management team and staff for their considerable effort and contribution over the duration of the strategic review, particularly during recent times while managing COVID-19 related disruption,” he said.
The move follows a strategic review performed by Macquarie Capital into the struggling Arq Group, which started in September 2019.
This announcement follows months of struggles for the Australian company, with it closing the 2020 half year ending 31 December with a loss of $129 million and an earnings loss of up to $31 million in February, and then flagging cuts totalling $1.6 million in April due to the coronavirus pandemic.
Its enterprise business was causing the business strife from September 2019, and therefore the company was looking at the viability of selling either of its enterprise or SMB divisions as far back as at least October 2019.
It then divested its enterprise business in March 2020, as well as the rights to the Arq Group name, which was the first phase of the strategic review.