Domain registrar, Melbourne IT, has announced its intention to acquire applications hosting provider, WebCentral Group, in a deal worth about $61.2 million.
The two entered a Scheme of Arrangement agreement on Monday. The value of the deal is based on Melbourne IT acquiring 40 million WebCentral shares at $1.53 each as well as some options. Shareholders are expected to vote on the acquisition at a special meeting in August.
WebCentral Group CEO, Andrew Spicer, said the two companies had talked about a merger for the past 18 months.
"It made a reasonable degree of sense - we have very complementary businesses," he said. "This gives us the opportunity to be a high-quality, large Web services company."
The biggest benefit for WebCentral and its channel partners was the chance to gain a new customer base for its swelling portfolio of software-as-a-service (SaaS) offerings, Spicer said. The combined organisation would have a consolidated customer base of 300,000 companies.
"This gives us a whole new channel to sell our different services to local business," he said.
Both organisations were also committed to retaining their brands as well as selling through partners.
Spicer said there was some business overlap which presented immediate cost savings. For example, both companies were currently paying listing fees to the Australian Stock Exchange, as well as maintaining separate boards. Overall integration was expected to take 2-3 months.
There was also some staff overlap that would be dealt with during the integration process, he said. WebCentral currently maintains 200 staff, as well as 35 in its FTR (media asset management) division. The joint organisation would have 400 employees worldwide and combined annual sales of $130 million.
Spicer was as yet undecided on his future with the company. However, Melbourne IT managing director, Theo Hnarakis, will stay on as CEO and managing director of the combined group.