Diversified telecommunications provider Uniti Wireless (ASX: UWL) has signed a binding agreement to acquire 100% of Queensland-based Communications Platform-as-a-Service (CPaaS) company Fone Dynamics.
The agreement is comprised of a minimum consideration of approximately $5 million, based on Fone’s annualised and normalised earnings before interest, tax, depreciation and amortisation (EBITDA) at June 2019.
The minimum will be payable 100% in Uniti ordinary, fully-paid shares using the volume weighted average price (VWAP) for the 10 days preceding the acquisition announcement.
A performance-based (or earn-out) consideration has also been included, based on the Fone’s EBITDA for the 2020 financial year, over and above that upon which the minimum is determined.
The earn-out will be payable between 70% and 100% in Uniti ordinary, fully-paid shares using the VWAP for the 10 days prior to 30 June 2020.
Any component of the earn-out consideration not paid in Uniti shares will be paid in cash in July 2020.
The maximum aggregate consideration payable for Uniti’s acquisition of Fone is expected to be approximately $8.4 million.
The planned acquisition follows Uniti’s $9.5 million purchase of Australian internet service provider FuzeNet in February and $450,000 purchase of broadband retailer Pivit in April.
Uniti has said the acquisition of Fone will be “significantly earnings per share accretive” for its investors from 2020.
Based on the expected minimum consideration, the company expects a 2020 financial year accretion of approximately 30%.
Should the maximum earn-out be achieved, the accretion would increase to around 50%.
Brisbane-based Fone provides specialist in-bound voice services and business-grade SMS tools to facilitate brand, communications and data-driven marketing for its customers.
Under the terms of Uniti’s acquisition, Fone’s co-founder Jordan Grives will join Uniti’s executive leadership team and become a sizeable Uniti shareholder.
Mr Grives will be responsible for the continued growth of Fone as well as the Uniti’s wider corporate strategy which includes business-to-business sales.
Uniti expects to finalise the acquisition of Fone in June.
Uniti’s recent business acquisitions generated significant improvements in the company’s cash flow position for the three months to 31 March.
In its quarterly report released this week, posted a positive net operating cash flow of $672,000 excluding one-off restructuring costs and government grants during the period.
Customer receipts of $4.995 million were up 10.3% on the previous quarter and comprised $3.228 million from FuzeNet and $1.767 million from Uniti’s normal operations.
The company said receipts for the June period will include a full quarter’s contribution from FuzeNet and partial contributions from acquisitions including (but not limited to) Pivit and Fone.
At midday, shares in Uniti were trading 11.11% higher at $0.60.