LONDON -- Easynet Group Plc (LSE: ESY), ('Easynet' or the 'Company'), aleading pan-European broadband networking company, today announces theacquisition of Novaxess Beheer BV and its subsidiaries ('Novaxess'), a leadingDutch business broadband local loop company, for an aggregate consideration of£26.2m (€38.4m) including assumed debt.
The acquisition will be partly financed by a vendor placing of 6.35 million newshares in Easynet (the 'Placing'), at a minimum price of 130 pence per share.
Novaxess
Novaxess is focused on providing broadband in the business market and hasapproximately 4,500 customers and approximately 125 employees. Novaxess hasunbundled 84 exchanges in the Netherlands, covering most of the key businessdistricts. Over 85% of those exchanges are above break-even.
In the year to 31 December 2003 Novaxess generated revenue of £15.1m (€22.1m),EBITDA of £1.8m (€2.7m), EBIT of £0.3m (€0.4m), profit before tax of £0.1m(€0.2m) and had net assets of £1.8m (€2.7m). Novaxess is growing its revenuerapidly, at a rate similar to Easynet, and is demonstrating a substantialimprovement in margins.
Acquisition rationale
Easynet is focussed on developing its capabilities to reinforce its growthacross Europe. Novaxess fits well with Easynet's existing Dutch business withits similar business lines and a focus on the same segments of the market. Thekey strategic benefits of this acquisition are:
It will significantly enhance the capability of Easynet's Dutchbusiness, moving it to cash flow positive;
Novaxess's unbundled exchanges, when combined with Easynet's leadingposition in local loop unbundling in the UK, will enhance the Group's ability tooffer differentiated pan European products;
Novaxess has developed a Voice over IP solution for businesses thataccelerates Easynet's plans in that area;
It improves Group EBITDA; and
It accelerates Easynet's progress towards cash flow positive.
In addition, Easynet expects to generate significant synergies from thistransaction, in the order of £1.0m (€1.5m) on an annualised basis, largelythrough the rationalization of overlapping infrastructure, including the use ofNovaxess' local exchanges for Easynet's client base. One-time integration costsare estimated to be approximately £1.0m (€1.5m).
David Rowe, CEO of Easynet said: 'This acquisition has four key benefits for theCompany: it significantly enhances our Dutch business, moving it to cash flowpositive; it extends our business class pan-European product set through the useof the local loop; it improves Group EBITDA and it accelerates our progresstowards cash flow positive. In addition, Novaxess has developed a Voice over IPsolution for businesses, which advances our plans in that area.'
Easynet Ltd.