Uniti is now Unifying; another agreed acquisition

Uniti is now Unifying; another agreed acquisition

Since writing on Uniti Wireless Limited (ASX: UWL) five weeks ago, two things have occurred. Firstly, the company has announced two acquisitions. Pivit Pty Ltd was acquired for approximately $0.45 million inclusive of all customer assets, brand and associated intellectual property and more recently Fone Dynamics was acquired for between $5.04 million and $8.4 million, depending on their EBITDA in each of the years to June 2019 (base consideration) and the year to June 2020 (performance-based consideration).

The vendor, Jordan Grives, will likely receive 9.73 million UWL shares for the base consideration, taking UWL’s shares on issue to 141 million. This will equate to 6.9 per cent of UWL’s issued capital. If the maximum performance-based consideration was theoretically executed at today’s price ($0.83), then Jordan would receive an additional 4 million UWL shares (taking his holding to 13.73 million UWL shares), and the company’s theoretical shares on issue to 145 million. Jordan Grives will join UWL’s executive team.

Fone Dynamics specialises in modern inbound voice, including 13, 1300 and 1800, and business-grade SMS services. Fone Dynamics has developed an extensive proprietary intellectual property used to deliver its Communications Platform-as-a-Service (CPaaS) offerings and provides its customers with advanced data analytics. Fone Dynamics has only a small percentage of the available market and will be the third pillar (“specialist products/ markets”) of UWL’s growth strategy. The first two pillars include “wireless networks” and “fibre networks”.

The Fone Dynamics acquisition is forecast to be significantly earnings per share accretive from the year to June 2020, and a range of 30 per cent (base consideration) to 50 per cent (maximum performance-based consideration) has been postulated. However, getting a grip on this number is difficult.

Second, the share price of Uniti Wireless Limited has continued to run, jumping from $0.56 to the current $0.83 (+48 per cent) in the past five weeks; and from $0.25 to $0.83 (+232 per cent) since I first wrote on UWL eight weeks ago.

With the estimated 141 million shares on issue, assuming the base consideration for the Fone Dynamics acquisition, then UWL has a market capitalisation of $117 million.

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Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

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