Mobile sim card company amaysim has turned its attention to disrupting the big players in the retail energy market by buying Click Energy, an online pure-play energy seller, for $120 million.
CEO Julian Ogrin described the acquisition as highly strategic which progresses the company’s vision to be the remote control of the smart home.
The Melbourne-based Click started in 2006 and sells electricity in Victoria, NSW, Queensland and South Australia and gas in Victoria and NSW. It has 155,000 subscribers and in 2016 had $173 million in revenue.
“Consistent with our goal of increasing relevance to the Australian household, we see energy as the most logical vertical to perfectly complement our existing suite of mobile and broadband products,” Ogrin says.
“We see a significant opportunity for a virtual energy retailer to disrupt the larger incumbent players that own their own generating assets and are burdened with legacy systems and pricing structures.”
The acquisition will be funded through a combination of $40 million in amaysim shares at $1.79 each and the balance through a debt facility with the Commonwealth Bank.
A short time ago, amaysim shares were trading at $1.92, up 4.6%.
The combined group will have net revenue of $497 million and underlying EBITDA (earnings before interest, tax, depreciation and amortisation) of $55 million.
Click is a digitally focused business model with monthly billing, no lock-in contracts and DIY self-service platform.
amaysim sees a big opportunity in cross selling between the two businesses, two low-cost products being driven by a multi-brand marketing strategy. Here’s the vision:
Together amaysim and Click reach a 740,000 households.
amaysim in February announced half year revenue of $136.64 million, up 16.5%. Underlying profit after tax was $8.34 million, up 10%.
Ogrin says amaysim has had a close relationship with Click for more than a year and he’s been impressed by the disciplined growth its management has been able to deliver.
Dominic Drenen, the CEO and managing director of Click, is staying with the company.
He says: “The emergence of multi-retail product offerings in the home has been a part of Click’s strategic plan, as we have seen this evolve in other markets globally.”