Superloop Limited (ASX: SLC), an independent provider of telecommunication services across the Asia Pacific region has entered into a Scheme Implementation Deed with BigAir Group Limited (ASX: BGL), which is in the business of providing ICT network, cloud-based services & network infrastructure for campuses and corporates in Australia. Under the deed, Superloop will acquire the entire 100 percent of BigAir’s shares at a substantial premium to the market price. The bid is subject to shareholder approval of BigAir and the courts, and considering all conditions are satisfactorily met, the acquisition is likely to be completed sometime in December this year.
 
The combined group will be a major full?service telecom provider and will offer managed services such as end?to?end voice, data, cloud and managed IT services. According to Superloop’s CEO Bevan Slattery, the acquisition will enable the company to leverage its fibre optic network, deliver low cost gigabyte connectivity and increase wireless capabilities.
 
The news of the merger comes just a few months after BigAir acquired all the shares in CyberHound Private Limited in July this year, following its successful bid of Anittel and Oriel in 2014. CyberHound is a leading provider of managed cybersecurity services to hundreds of businesses & schools in Australia. In terms of operational performance, BigAir has been a relatively consistent performer for close to a decade and the full year FY16 results are an indication of yet another year of outstanding accomplishments for the company.
 

Strategic fit scenario (Source: Company Reports)
 
In the latest development from BigAir, the Board of Directors have urged stakeholders to vote in favour of the merger suggesting that the arrangement is in the best interests of all the shareholders. The shareholders of BigAir are expected to be offered with a choice of only shares or a combination of shares and cash in Superloop, where the maximum cap on cash consideration is placed at $95 million. Particularly, the acquisition will occur via either an all-scrip arrangement involving 0.371 Superloop shares per BigAir share at an implied offer price of AUD 1.13, or a combination of cash and scrip, which would see combination of AUD $0.70 and 0.118 Superloop shares per BigAir share at an implied offer price of AUD 1.06. Both options seem to value the company at more than a 30% premium to its last close. The acquisition is expected to yield synergies with annual cost savings of $4 million. Superloop is expected to raise $65 million equity to fund the acquisition and intends to implement dividend policy with its FY17 results.

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