5G Networks (ASX:5GN) share price falls on takeover update

The 5G network share price is falling today as the company provided the market with an update in its takeover bid for Webcentral.

| More on:
big fish eating smaller fish ASX shares M&A 2021

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The 5G Networks Ltd (ASX: 5GN) share price has fallen today as the company updated the market with its bidder statement. The bidder statement relates to its takeover attempt of Webcentral Group Ltd (ASX: WCG) which is discussed in more detail below. The 5G Networks share price closed 2.25% lower today at $1.74.

Webcentral is an Australian, full-service digital services partner for small and medium businesses. 5G Networks already owns a 10.2% stake in the company.

What has changed?

5G Networks first stated its intentions to acquire Webcentral in early September along with a $30 million capital raise to provide the funds for the takeover. 

However, prior to the announcement, Web.com was the leading candidate for the takeover. The American domain registration and web development company had proposed to acquire all of the shares in Webcentral for 15.5 cents each.

Nonetheless, despite an improved offer of 18 cents per share from the American company, the Webcentral board has decided to go with 5G Networks' proposal. As such, the company has entered into a bid implementation deed with 5G Networks.

Why did 5G Networks' offer get selected?

Notwithstanding a higher offer by Web.com, the Webcentral board believes the 5G Networks proposal provides shareholders with a better outcome.

This is as a result of ongoing exposure to potential improvement in the performance of Webcentral after a period of underperformance and a declining share price. Furthermore, there is potential value from benefits of scale and potential synergies of the combined group.  

Ultimately, the deal with 5G Networks provided less completion risk and higher execution certainty as compared to the Web.com scheme. 5G Networks has agreed that it will offer to acquire all the Webcentral shares which it does not presently hold.

What will Webcentral bring to 5G Networks?

I believe the deal represents a transformational transaction for 5G Networks, materially changing the scale and earning profile of the business. Furthermore, the deal would see increased diversification and resilience of 5G Networks' earnings profile through the introduction of complimentary product offerings. As such, the combined businesses would create a diverse enterprise with a significant combined customer base and deep management expertise.

Finally, the opportunity to gain exposure to new markets and access a large base of new customers represents obvious upside. Management believes the combination of the two businesses can generate synergies of over $7 million per annum on a run rate basis.

Foolish takeaway

In my opinion, the acquisition is a shrewd piece of business for 5G Networks. Webcentral is a strong strategic fit, aligning with 5G Networks' growth strategy to acquire businesses with operational and product synergies to augment its current capabilities. The 5G Networks share price is currently trading nearly 126% higher so far this year.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

Up 34% since April, ASX 300 healthcare stock lifts off again today on new milestone

The ASX 300 healthcare stock has been on a tear since hitting one-year lows in April.

Read more »

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition
Mergers & Acquisitions

WiseTech share price storms higher on $3.25b blockbuster acquisition

What is the company spending billions on? Let's find out.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Broker Notes

5 of the best ASX 200 shares to buy in June

Let's see what brokers are recommending to investors for next month.

Read more »

A man looking at his laptop and thinking.
Share Market News

5 things to watch on the ASX 200 on Monday

Here's what to expect on the benchmark index today.

Read more »

An ASX 200 market analyst holds his hand to his chin and looks closely at his computer screens watching share price movements
Opinions

Forget term deposits! I'd buy these two ASX 200 stocks instead

I think ASX stocks could make a much better investment than term deposits.

Read more »

A cute little kid in a suit pulls a shocked face as he talks on his smartphone.
Share Market News

Telstra share price hits 8-year high amid a lacklustre trading week

The ASX 200 communications services sector was the best performer last week, rising 2.96%.

Read more »

share buyers, investors, happy investors
ETFs

How I would build a $100,000 portfolio with ASX ETFs today

You don't need more than three ETFs to build a diversified portfolio...

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX 200 shares could rise 20% to 100%

Analysts are expecting these shares to deliver big returns over the next 12 months.

Read more »