The 5G Networks Ltd (ASX: 5GN) share price has rocketed 10.06% higher today after news of a merger with Webcentral Group Ltd (ASX: WCG). Shares in both of these Aussie communications groups have ended the week after entering into a Merger Implementation Agreement.
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Webcentral merger sees 5G Networks share price soar
Investors received the news of a merger between these Aussie small-caps well. According to today's presentation, the merger will aim to deliver value through a number of avenues.
5G Networks focuses on cloud-based solutions, managed services and network services. Webcentral is one of Australia's top domain providers and the "largest Australian-owned operator of fibre networks, cloud and data centres", according to the company's presentation.
The companies are hoping a larger entity will create enhanced prospects for growth. Webcentral and 5G Networks also flagged a push towards inclusion in the S&P/ASX 300 Index (ASX: XKO) as another highlight.
Other key benefits of the merger include a simplified sales strategy for a combined 330,000+ customers, alongside cost synergies, combined management expertise and a consolidated debt facility.
Investors were clearly bullish on the merger news as the 5G Networks share price surged higher. Shares in the telco are up 10.06% at the time of writing with Webcentral shares up more than 5%.
On a pro-forma, consolidated basis, the merged entity would have revenue of $110-120 million with an earnings before interest, tax, depreciation and amortisation (EBITDA) margin in excess of 20%. On top of the 330,000+ customers, the companies boast 2,500 corporate and government clients, along with 360 staff.
The big message today was one of growth. This morning's presentation indicates the consolidated group will be focused on acquisitions and organic growth into FY2022 and beyond.
That was music to investors' ears who propelled the 5G Network share price higher on Friday morning. Today's gains mean the company's shares are now up 13.5% in July.
