- Offer is 25 percent higher than M2's closing price Friday
- M2 shareholders will own 56 percent of enlarged group
Vocus Communications Ltd. agreed to buy M2 Group Ltd. in a A$1.93 billion ($1.35 billion) deal that will be Australia’s largest telecommunications acquisition in more than four years.
M2 investors will receive 1.625 Vocus shares for each one they own, according to a statement from both companies Monday. That values M2 stock at A$10.55 a share, 25 percent more than the stock’s closing price Friday.
A wave of mergers among Australia’s second-tier telecommunications providers is putting pressure on the remainder to bulk up. Today’s agreement, struck the same month that TPG Telecom Ltd. completed its purchase of IiNet Ltd., takes the industry’s deal tally in Australia in the past 12 months to $5.4 billion, according to data compiled by Bloomberg.
“It looks like a fairly logical fit,” Luke Macnab, a Sydney-based analyst at Baillieu Holst Ltd., said by phone. “Combining their offerings, the marketing and the infrastructure makes them a much more viable competitor to some of the larger players.”
M2 shares jumped 13 percent to A$9.55 at the close in Sydney after earlier reaching A$10.47. Vocus fell 7.4 percent to A$6.01.
Before today, M2 had gained 3.6 percent this year, beating the 6.8 percent decline in the benchmark S&P/ASX 200 index. Vocus advanced 1.4 percent in the same period.
M2 had vied with TPG to buy IiNet, a purchase that created Australia’s second-largest provider of broadband services after Telstra Corp., the former phone monopoly. Vocus bought Australian fiber-optics carrier Amcom Telecommunications Ltd. in July.
Geoff Horth, chief executive officer of M2, will head the combined group, of which M2 shareholders will own 56 percent, according to the statement.
“Our ability as a merged company to capture future growth opportunities in Australia and New Zealand will be significantly enhanced,” M2 Chairman Craig Farrow said in the statement.