Brisbane-based telco and IT services provider Over the Wire has announced plans to acquire VPN Solutions for a total consideration of $15.6 million, a multiple of five times earnings.
VPN is a New South Wales-based Cisco partner that specialises in delivering complex managed network solutions to SME customers. The company has 21 staff, who will all be joining OTW, and boasts 150 business customers such as Cromwell Property, M&K Lawyers and Open Minds. VPN also sells a range of other IT services, cloud and managed voice solutions.
The company was founded in 2002 in Chatswood in Sydney's north and has offices in Sydney, Melbourne, Brisbane and Adelaide. According to OTW, VPN Solutions reported revenues of $11.9 million and EBITDA of $3.1 million in the financial year ending 30 September 2017.
Earlier this year, VPN landed a deal to overhaul the WAN network for radio giant Nova Entertainment at 13 sites, installing Cisco routers, switches, hosted telephony and a managed internet solution.
The transaction is comprised of $14.8 million in cash, plus $780,000 in OTW shares priced at $2.04 each.
OTW said in an ASX announcement that the acquisition would accelerate its expansion in NSW and South Australia, as well as provide new cross-sell opportunities to VPN's networking customers.
"We are very excited to be able to welcome VPN Solutions to the Over the Wire group," OTW managing director Michael Omeros said.
"VPN Solutions is a high-quality provider of managed networks with an impressive list of long-term clients. VPN Solutions expedites our geographic expansion plans into New South Wales and South Australia and complements our expansion into Victoria following the acquisition of Telarus earlier this year."
VPN marks the second acquisition for OTW in the past 12 months. In December last year, OTW acquired Melbourne-based business-grade telco Telarus for $7.6 million. OTW also made a handful of acquisitions before listing on the ASX in 2015, which includes Gold Coast-based VoIP business Faktortel for $3.6 million and Brisbane-based data centre and enterprise hosting business Sanity for $5.2 million. OTW also acquired Spiderbox for $700,000 in March 2016.
Over the Wire reported a 45 percent increase in revenue in the 2017 financial year with $34 million and earnings of $7.3 million.