Aussie Broadband tipped to be plotting raise for Symbio buy

Aussie Broadband could be set to raise funds through the equity market.

Aussie Broadband is in a trading halt ahead of an equity raising to fund its takeover target Symbio that had agreed to be acquired by the telecommunication company.

Apparently, the telco was out speaking to institutional investors this week about launching a placement on the back of the deal, as first revealed by DataRoom online, with Goldman Sachs operating as its adviser.

Shares on Wednesday entered a trading halt.

Symbio this week received a new binding offer from the listed internet services provider, no longer conditional on due diligence or financing.

On Wednesday, it entered into a scheme of arrangement with Aussie Broadband, where shareholders would receive $2.26 in cash and 0.192 Aussie Broadband shares for each Symbio share, implying an offer price of $3.01 a Symbio share.

This was after carrying out due diligence from an earlier offer of $3.15 per share, valuing the target at about $260m.

Before the offer was made, Symbio’s shares last traded at $2.81.

While sources say a raise to fund the transaction is on the cards, the company said $435m of debt will also be used to fund the deal, including a $220m revolving cash facility, a $160m acquisition facility, a $30m bridging facility and a $25m working capital facility.

The funds will be used to fund the acquisition and refinance Aussie Broadband’s existing debt facilities.

Earlier, Superloop was offering $2.85 in cash and scrip before its bid was trumped by its listed competitor.

Symbio, advised by Jarden and MA Moelis, operates in the cloud communications market, replacing old-fashioned telecom networks with software.

“We have been impressed by the Symbio story, its team and its culture, which we think is well aligned to ours,” said Aussie Broadband managing director Phillip Britt.

“Symbio brings additional scale and capabilities that will support the continued growth of Aussie Broadband’s wholesale and enterprise and government offering.”

The deal will accelerate significant growth in Aussie Broadband’s wholesale and enterprise and government segments, create diversification, increase scale and create cost efficiencies as well as access new capabilities.

It intends to operate Symbio as a standalone business in the near-term, with the businesses integrated and efficiencies realised over time.

Analysts at Unified Capital say that they believe the offer is capable of generating at least 13 per cent of earnings accretion for Aussie Broadband and values the business at 13 times net profit and 7.6 times earnings before interest, tax, depreciation and amortisation with about $258m of net debt.