The Aussie Broadband Ltd (ASX: ABB) share price is jumping up higher today after rumours swirled that it may be about to acquire Over The Wire Holdings Ltd (ASX: OTW).
Aussie Broadband made moves last month to prepare to go on the hunt for acquisitions, after a capital raising. The company said that it expected that the majority of the capital raised would be used to make acquisitions.
Aussie Broadband has Over The Wire in its sights
The Australian owned and operated telco released a response to the media speculation around whether it will acquire Over The Wire. Aussie Broadband confirmed that it is in a period of exclusive discussions regarding a “possible combination of the two entities”.
Over The Wire was placed into a trading halt before the market opened and said it will remain in a trading halt until Tuesday, 26 October 2021 or when the announcement outlining this situation is released to the market.
Who are Over The Wire?
Over The Wire is a telecommunications, cloud and IT solutions provider. It has a network across Australian capital cities and Auckland, NZ. It has a market capitalisation of around $300 million.
Its products are aimed at business customers, with a suite of products including data networks, internet, voice, data centre co-location, cloud and managed services.
What happens now?
Well, Aussie Broadband said that the discussions are “preliminary and incomplete”. No agreement has been reached and there is no guarantee that any agreement will be reached.
The company said that it will keep the market informed of “any material developments”.
Over The Wire will likely remain in a trading halt until an announcement is made that outlines a proposed offer.
Unfortunately we don’t know any details about what due diligence Aussie Broadband might be conducting, or how long that might take.
Final thoughts on the Aussie Broadband share price
It has grown a lot since it listed just over a year ago. In the last six months alone the share price has gone up by over 62%.
The Aussie Broadband share price has risen a further 5.77% on the back of this news. It seems to have a decent amount of investor growth expectations built into the share price now, after rising so strongly.
It’ll be interesting to see how much Over the Wire could add to Aussie Broadband’s overall offering, if the deal goes ahead of course.
Aussie Broadband is a intriguing company and share idea. There is lots to like about it, however I’m not sure whether today’s share price is a good value buy-in price. Having strong valuation methods is something I would recommend to any investor.
