M2 Telecommunications Group has acquired the business assets of Time Group. The acquisition was undertaken through Southern Cross Telco Pty Ltd, a wholly owned subsidiary of M2 Telecommunications. The investment is for a cash consideration of $18.35 million, to be paid over three tranches. The first tranche is payable upon completion, with the remaining tranches payable six and nine months after completion. M2 expects the acquisition to be earnings accretive in FY2013.
The acquired assets include customer contracts and related records. M2 expects the acquisition to strengthen its position as the pre-eminent challenger in the SMB telecommunications market. The Time Group currently boasts around 30,000 small and medium sized business (SMB) and residential customers throughout Australia. The investment will be funded from a combination of M2’s available working capital and a debt facility. Commenting on the acquisition, M2's CEO, Geoff Horth noted the investment gives the company a considerable customer base.
According to Horth, the company has worked with owners of the Time Group for several years through M2Wholesale division, during which Time Group’s business has grown in both scale and operational maturity. The Time Group assets were purchased for less than three times annual EBITDA, consistent with the purchase price of other assets of this nature, noted an M2 release to the ASX. M2 has been on an acquisition spree from last year, having acquired Edirect and Clear Telecoms.
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