Will Blue Sky Telecom’s acquisition benefit Nexion Group (ASX:NNG)?

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Summary

  • Nexion Group Ltd (ASX:NNG) on Thursday announced that it had completed an agreement to acquire Blue Sky Telecom Pty Ltd as part of its growth strategy.
  • The agreement to acquire 100 per cent of the issued share capital of Blue Sky Telecom comes for an upfront scrip-only consideration of A$2 million-plus earn-outs.
  • The acquisition was an all-share transaction with a substantial portion of total acquisition price subject to revenue-growth performance hurdles.

Nexion Group Ltd (ASX:NNG) on Thursday announced that it had completed an agreement to acquire Blue Sky Telecom Pty Ltd as part of its growth strategy. The agreement to acquire 100 per cent of the issued share capital of Blue Sky Telecom comes for an upfront scrip-only consideration of A$2 million-plus earn-outs.

Source: © Prathanchorruangsak  | Megapixl.com

The acquisition was an all-share transaction with a substantial portion of total acquisition price subject to revenue-growth performance hurdles. The acquisition facilitated a seamless interconnection of all products and services into one “easy-to-deploy” customer edge to hybrid cloud full stack service offering, which was expected to yield revenue and product synergies.

Blue Sky currently has over 400 active clients with the majority located in Western Australia. Its revenue has grown by 20 per cent to A$2.4 million in FY20 and growth was expected to accelerate materially in FY21. Revenue year-to-date, as at the end of March 2021, was A$2.9 million and the company was very optimistic about the final quarter of the financial year and beyond. The significant increase in FY21 revenue was due to Blue Sky’s new Enterprise and Satellite divisions.

What’s the reason behind acquisition?

The acquisition formed part of NEXION Group’s expansion strategy outlined in the company’s recent prospectus, specifically acquiring local ICT service providers, which brought relevant skills and expertise to the group as well as the opportunity for accelerated growth.

Source: © Starfotograf   | Megapixl.com

The acquisition created strong growth opportunities through the combination of Blue Sky’s telecommunication services bonded to the core SD-WAN and Hybrid Cloud network being rolled out by NEXION.

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Stock performance

Shares of Immutep closed at A$0.22, down 0.0050 points, or 2.22 per cent on Wednesday, 7 April 2021, as against the previous closing on Tuesday, 6 April 2021. The stock has given a negative return of 13.6 per cent so far this year.

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