If the deal gets shareholder approval at an EGM later this month, (it is being partly financed with an institutional placing that has raised approximately $46.1 million – GBP27.7 million), UK-based GX Networks will be renamed Pipex Communications Plc in order to fully utilize the Pipex brand. Prior to March 2003, GX Networks was known as Zipcom plc.

GX Networks sees the deal as an opportunity to rebrand the entire group as Pipex, which is one of the strongest brand names in the sector, in addition to improving the mix of products that it sell, as Pipex has established a large broadband customer base.

GX Networks plans to fund the cash element of the deal through a new debt facility of $25 million (GBP15 million), and around $16.6 million (GBP10 millon) from existing cash resources.

Pipex owner David Rickards, stands to receive $83.3m (GBP50 million) in cash, and the remaining amount in shares, plus he will join GX’s board of directors.

He bought Pipex two years ago from troubled US telecoms operator WorldCom Inc, for an undisclosed amount. He then move into the high-speed Internet connection market at just the right time, as it was being opened up by deregulation. Pipex carved out a 6% share of the UK ADSL market, with an established position as an Internet service provider to an 119,000 strong customer base, mainly consisting of small corporates, SMEs, and residential customers. That 6% market share equates to one in 10 of all ADSL connections in the United Kingdom.

Part of Pipex’s success was its willingness to spend cash up front in order to attract subscribers, combined with competitive monthly subscriptions that undercut the larger players such as BT Group Plc [BT.L] and AOL [AOLq.L].

For the year ending May 31, Pipex made a profit before tax of $16.8m (GBP10.1 million), on revenues of $52.6 million (GBP31.6 million). It also currently has $33.3 million (GBP20 million) in the bank.

The acquisition of Pipex is one of a number that GX Networks has made over the years. Last month, it bought Firstnet Services Ltd for $7.1 million (GBP4.3 million). In July, it acquired XTML Ltd and Compulink Information eXchange Ltd. In October last year, Zipcom acquired Transigent through a reverse takeover before changing its name to GX Networks.

This article was based on material originally published by ComputerWire.