Saturday, 30 July 2016 06:44

Megaport paying $3.4m for acquisitions to leverage European expansion Featured


Network visualisation and interconnectivity provider Megaport, the Brisbane-based company started by serial entrepreneur Bevan Slattery, has laid the foundations for a major expansion in the European market with the acquisition of companies in Germany and Bulgaria.

The deals, announced on Friday, see Megaport acquiring Germany’s second largest Internet exchange operator, PEERING GmbH, which operates under the brand ECIX, and Bulgarian carrier-grade pan-European networks services provider, OM-NICX.

Megaport has signed agreements with both companies and expects the transactions to close by early August.

Combined, the acquisitions represent 48 European sites and the deal for the two companies is costing the ASX-listed Megaport (ASX:MP1) a total of $3.1 million. The companies have estimated combined annual revenues of $4.5 million.

Megaport is funding the acquisitions from cash reserves and says the combined acquisitions will add 180-plus customers to its roster.

Announcement of the acquisitions follows Megaport’s completion of a capital raising of $17.85 million through a private placement of 10,500,000 fully paid ordinary shares, also announced prior to a trading halt yesterday.

The acquisitions coincided with Megaport officially launching its elastic interconnection platform in Europe on Friday.

Megaport will use the funds from the capital raising to ramp up the expansion of its network interconnectivity platform in Europe, North America and the APAC region, and for staffing, marketing and general working capital requirements.

Megaport chief executive Denver Maddux said Europe represents a “tremendous opportunity for Megaport and our acquisition of PEERING GmbH gives us depth within Germany, one of the largest economies in Europe where cloud services are forecast to grow significantly".

"I'm really pumped that we are formally launching services in Europe as well as announcing the acquisition of these two great companies that are accretive to our business and align with our values and culture,” he said.

“When you consider the market coverage each acquisition brings to our build they dovetail perfectly and leapfrog our initial plans for Europe. On completion of the transactions Europe will become Megaport's largest market in terms of coverage and revenue. That's pretty incredible."

Stefan Wahl , chief executive of PEERING, GmbH said: "In terms of culture, capabilities, and neutrality, Megaport was the obvious choice to extend ECIX's industry-changing services outside Germany . We are nimble which gives us the ability to deploy quickly and align our services to our customers' needs.

"Megaport is the same and understands the importance of maintaining those values and capabilities while growing their business. The ECIX team are absolutely thrilled to join such a phenomenal company and team and are committed to supporting Megaport's success in Europe."

On the acquisition of OM-NIX, based in Sofia in Bulgaria, Maddux says OM-NIX has extensive reach into Eastern Europe and the Balkans region and, “combining these acquisitions with the original Megaport build footprint, we now have extraordinary opportunity to extend our Elastic Interconnection across Europe".

Yuliy Nushev, founder of OM-NIX, says it was “immediately clear OM-NIX could play a big part in Megaport's vision to bring Elastic Interconnection to Europe".

“Our unique footprint is an excellent complement to the core Megaport footprint and offers a great number of locations and ecosystem partners with which to connect," he said.

"This service footprint will provide all our existing customers and partners cloud connection and Internet exchange capabilities via Megaport Virtual Cross.”

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