Australian Internet service provider OzEmail has announced it will buy rival ISP Access One from Solution 6, and also the remainder of the Solution 6 Internet business, for A$25 million (US$17.2 million) worth of cash and ordinary shares.
The acquisition, which brings to an end twelve months of speculation, has been on the cards since OzEmail made an offer to the Solution 6 board last year. According to sources, the Solution 6 board declined the earlier offer, believing it was insufficient. Officials from both companies today refused to comment on whether OzEmail had upped its offer to Solution 6 this time around.
The terms of the agreement will involve the purchase by OzEmail of all Solution 6's shares in Access One and "all assets which are necessary to conduct the Internet business."
Solution 6 will receive A$5 million and the issue of 10.5 million ordinary A$0.004 shares (about nine per cent of the expanded ordinary share capital), and will grant OzEmail a call option to acquire 4.16 million ordinary shares at an exercise price of A$0.75.
Solution 6's chief executive, ex-Telecom Xtra chief Chris Tyler, will also join the board of OzEmail on completion of the acquisition.
OzEmail and Access One are currently ranked number one and number three in terms of ISP market share in Australia, according to market analyst www.consult.
Tyler said OzEmail's acquisition is a "symptom of consolidation" within the ISP market, which will force companies to be "bigger and stronger" in order to compete.
The acquisition is due for completion prior to November 24, 1997.