Vocus & M2: First thoughts

Vocus is expected to acquire M2 under a reverse takeover arrangement subject to a shareholder vote in 2016. Vocus has proposed to pay 1.625 Vocus shares for each M2 share and the combined entity will be managed by personnel from each firm. The benefits of the deal are fairly substantial; $40 million (approx. 4 per cent of the combined cost base) of cost synergies are expected to arise from sharing office space, removal of some administration costs and renegotiation with some suppliers. Much more may be realised in the event that agreements with Telstra can be renegotiated so as to utilise the Vocus network for backhaul or at least more favourable rates on assets currently utilised. Revenue synergies are likely although harder to quantify. M2’s salesforce will be able to sell Vocus fibre products to the 250,000 small and medium enterprises around Australia. We’re also expecting an uptick in the performance of the M2 network through additional bandwidth provided by Vocus which should theoretically translate into lower churn and hence higher subscription growth. READ THE FULL ARTICLE HERE: (VIEW LINK)