Why the 5G Networks (ASX:5GN) share price is storming 5% higher

The 5G Networks Ltd (ASX:5GN) share price is pushing higher today after announcing a new acquisition this morning…

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The 5G Networks Ltd (ASX: 5GN) share price is on the move this morning after announcing a new acquisition.

At the time of writing, the telecommunication carrier’s shares are up 5% to $1.30.

What did 5G Networks announce?

This morning 5G Networks announced an agreement to acquire 100% of leading dedicated cloud provider, Intergrid Group.

According to the release, the two parties have agreed a purchase price of $3 million. This represents a 4x normalised EBITDA multiple. The purchase price comprises $2.5 million in cash and $0.5 million in 5G Networks shares. The cash consideration will be funded from its existing cash reserves.

Synergies of $0.5 million per annum are expected to be realised in the first 12 months.

What is Intergrid?

Intergrid operates cloud hosting services within data centres strategically located in seven major cities across both Australia and New Zealand.

The Intergrid network is connected to over 40 data centres, optimising speed and web content delivery by reaching most of the Australian population in under 20 milliseconds. It supports high-speed streaming to households, powers Ag-Tech Internet of Things devices on farms, supports critical government applications, and everything in between.

The company currently generates annual revenue of $2.5 million and normalised EBITDA of $0.8 million.

5G Networks Managing Director, Joe Demase, commented: “5GN are really excited to be working with Intergrid in growing our digital infrastructure capabilities. In a very short period they have developed a valuable customer base with many blue-chip ASX 200 and government customers who are committed to pursuing a cloud experience which is unique and world class.”

“The capability for 5GN to now offer (Bare Metal) services at the edge, means that we can deliver dedicated cloud or hosting solutions pretty much to the front door of every major organisation in Australia. This enables content and application performances which are absolutely best in market.”

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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