Melbourne IT buys WME Group

6 months ago admin Comments Off on Melbourne IT buys WME Group

ASX-listed domain name registrar Melbourne IT is raising new capital to fund its $39 million acquisition of digital agency WME Group.

The purchase, according to Melbourne IT, will help reinforce its managed marketing capabilities and better target the small to medium business segment.

Melbourne IT is raising $30.7m from the market for the WME buy, with the rest coming through debt of approximately $9m.

The capital raising will see Melbourne IT offer one share for every existing 7 shares to investors at an issue price of $2.10, a 2.3 per cent discount on its last traded price of $2.15 on April 28. The institutional component of the raise will be conducted this week and close on May 2, while the retail entitlement offer will open on May 8 and close on May 18.

Melbourne IT boss Martin Mercer said that the WME buy is another step in the transformation of the company.

“This acquisition will build on the success we have experienced to date in providing managed marketing solutions for small businesses,” Mr Mercer said in a statement.

“The Melbourne IT of today is almost unrecognisable from the Melbourne IT of three years ago.”

He added that the WME buy is especially timely as managed marketing solution become the “growth engine” of Melbourne IT’s SMB division.

Mr Mercer expects the addition of WME to accelerate the growth in average revenue per user (ARPU) for Melbourne IT.

“We expect this powerful combination will enable us to grow ARPU at faster rates through enhanced cross sell and customer retention, as well as boost critical capability in search engine optimisation solutions and advanced customer account management,” he said.

The deal is expected to deliver a boost of up to $7.5m to Melbourne IT’s underlying earnings for fiscal 2017. WME’s key management will remain with the business.

The entitlement offer is fully underwritten by Bell Potter Securities Limited and Wilsons Corporate Finance Limited.

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