ASX-listed SMS Management and Technology has snapped up Sydney-based applications development company, Avoga. The acquisition is worth about $4 million in cash and shares.
The Melbourne-based services provider will pay an additional $1 million in cash, depending on future performance targets. SMS marketing and capability manager, Matthew Kaufman, said the purchase was a part of a five-year corporate strategy to improve its Sydney operations.
It also tied in with SMS' plan to focus on three key business areas: consulting, enterprise solutions and technology services.
SMS worked with Avoga on several projects prior to the acquisition, he said.
"It really supports two of our strategic objectives: the first was to build technology services, and the second was consolidating our Sydney office," Kaufman said. "We have never really been in a position in Sydney to help with packaged implementations or application development. With the acquisition of Avoga, we're expanding [our] technology services and we can now do that."
Kaufman anticipated Avoga would contribute $10 million to its bottom line. SMS will retain all 40 staff,with Avoga director, Lynda Chapman, taking on the role of SMS Technology Services director in NSW.
Avoga had key services capabilities in application development, such as Java, .Net and packaged implementation, Kaufman said. It also offered system integration skills around enterprise architecture, data base consulting, data warehouse and quality.
"The whole crux of the acquisition is about expanding our end-to-end capability so that we can provide a full suite of management and technology consulting," he said.
Avoga also played in four key industry sectors for SMS: financial services, government, manufacturing and retail.
"We are actively positioning ourselves to being a strong alternative to multinational organisations," Kaufman said.