After a week of posturing and denials, Solution 6 and Telstra last week announced an "in principle agreement" for Telstra to take a 15 per cent equity stake in the accounting software vendor.
The in principle agreement, subject to approval by Solution 6 shareholders, is for Telstra to acquire approximately 16 million shares in Solution 6 at $3.10 per share, an investment of approximately $50 million.
The agreement also provides for an option for Telstra to take a 25 per cent stake of Solution 6, exercisable at $3.50 per share during the next 12 months or market price at the end of the 12-month period, whichever is the lesser. Telstra will also be entitled to nominate two directors to the board of Solution 6.
As well as the equity agreement, the two companies have announced a strategic relationship. According to Solution 6's managing director, Chris Tyler, "Telstra and Solution 6 will be able to leverage each other's expert- ise. The application service provider business will be a powerful point of synergy."
Telstra's CEO, Ziggy Switkowski, said: "Telstra views this investment in Solution 6 as an important part of its continuing drive to deploy e-commerce and Web technologies in strategic markets such as the finance industry."