GX Networks to buy Pipex for £55m
To change name to Pipex Communications
GX Networks plc - the telco and business broadband outfit - is to buy Pipex for £55 million in shares and cash, it was announced this morning.
If the deal gets shareholder approval at an EGM later this month then GX Networks will change its name to Pipex Communications plc to make the most out of the Pipex brand.
Pipex - which is wholly owned by MD David Rickards and his family - has been around for 12 years. At the end of June it had around 119,000 punters - one in ten of all ADSL connections in the UK.
Part of its success as a broadband ISP was its willingness to spend cash up front to attract punters, combined with competitive monthly subscriptions which undercut the big boys such as BT and AOL.
Early on, many of Pipex's critics said such an approach could not be sustained. However, in the year to the end of May Pipex generated £32 million in revenue and notched up pre-tax profits of more than £10 million. As of today Pipex also has around £20 million of cash in the bank.
Said Mr Rickards, who will be joining the enlarged company: "We needed an alliance with a larger organisation to take our business to the next stage. GX, with its highly resilient network presence and a culture similar to ours, is the right choice for Pipex."
Said GX Networks chairman, Peter Dubens: "This is an important acquisition in the development of GX Networks as it allows us to become cash flow positive immediately and it enables us to rebrand the entire group as Pipex, which is one of the strongest brand names in the sector. Furthermore, it will improve the mix of products that we sell, as Pipex has established a large broadband customer base."
Last month, GX Networks bought Firstnet Services Ltd - the company that acquired fixed wireless broadband outfit Liberty Broadband (aka Tele2 UK) earlier this year - for £4.3 million.
The deal means that GX Networks has now added wireless broadband to the stable of products it can supply punters.
In July, GX Networks acquired XTML Limited and Compulink Information eXchange Limited, which were previously part of the Telenor Business Holdings UK Limited Group.
In October last year Zipcom acquired Transigent through a reverse takeover before changing its name to GX Networks Plc in March 2003. ®