M2 Telecommunications will acquire Dodo for $203.9 million and make an off-market takeover offer for Eftel for 35.81 cents per share, implying a total enterprise value of $44.1 million.
“The acquisitions are an excellent complement to our consumer division and combined, our business possesses an excellent capability to grow our share of both the consumer and small to medium business markets,” Geoff Horth, M2 CEO, said in a statement.
“Throughout the due diligence process we were very pleased to find the businesses to be highly efficient with robust internal systems and processes.”
The Eftel acquisition will depend on at least a 90 per cent acceptance condition, no material adverse changes in the company and no regulatory intervention, M2 said.
Larry Kestelman, chief executive at Dodo, is also a director at Eftel, with Eftel’s directors stating they will all accept the offer and have recommend shareholders accept if no other superior offers are made.
The acquisitions are expected to contribute more than $400 million in revenue in FY14 and will be funded by refinancing existing debt and a new $400 million loan facility.
Dodo has 400,000 customers and its products and services include broadband, landline phone, mobile, mobile wireless, electricity, gas and insurance.
The Dodo acquisition is expected to be completed in May.
Eftel was established in 1999. In September last year the company acquired VoIP provider Engin for $9.1 million. Its other brands include ClubTelco and aaNet.
M2 announced in February this year net profit after tax jumped 47 per cent to $24.7 million for the half year, with its Primus acquisition contributing strongly to revenue and earnings.
The company acquired Primus in June 2012 for $192.4 million.
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