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Mega merger creates IT channel stronghold

Mega merger creates IT channel stronghold

Five Australian IT channel businesses have rejected the option to sell out to interested overseas parties and are in the process of merging into one company.

In addition, the Victorian and South Australian-based companies intend to float the new entity on the Australian Stock Exchange later this year.

The companies - Microarts and Microarts South Australia (resellers), Chips & Bits (distributor), Internet Access Australia (IAA, an ISP) and TotalNet Presence (e-commerce solutions provider) - boast combined revenues in excess of $50 million. The new entity is to be called IT&E Limited.

"This will not be a Mickey Mouse operation," said Dean Wilson, managing director of Microarts. He is one of the main drivers behind the move to seek investors in an effort to take the businesses to the next level and to accelerate already good growth.

"The whole concept is about unifying these five businesses and bringing all the synergies under one umbrella to supply end-to-end e-commerce solutions.

"All have been trading profitably, but we have definitely seen and foresee the best growth to be in the Internet and e-commerce side of things," he said.

Wilson said the move has been on the drawing boards for about eight months and was not about trying to survive. There are already some common directorships among the contributing companies. Two high-profile board members have already been appointed, he said, and the chairmanship is being finalised this week.

It was also hinted that there are some high-level negotiations reaching a crescendo. These will tie IT&E to some big-name global Internet solution providers and software suppliers which will be "very strategic".

"Each of the businesses involved, particularly IAA and TotalNet, has been approached by various overseas and local investors who were looking to acquire businesses to complete their own float agendas," Wilson said.

"Once we saw what they were doing we started to ascertain what the possibility would be of us floating ourselves. It is a tremendous opportunity for us to take our successful business model outside of its mainly Victorian and South Australian base," Wilson said.

Once legal and accounting procedures are complete, IT&E will be looking to raise between $20-30 million through its initial public offering (IPO).

"It will be our intention to make some acquisitions in the Internet and e-commerce space as well as develop new business initiatives along the lines of full e-commerce outsourcing and logistics."

Wilson added that there is definitely an agenda to talk to a lot of resellers.

"We will be offering our resellers and our suppliers the opportunity to participate in end-to-end e-commerce solutions," he said.


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