ASX-listed services company, Hyro (ASX: HYO), has called off its multi-million dollar acquisition of electronic forms provider, Indigo Pacific.
Hyro chairman, Rob Clarke, attributed its decision to its revised 2008 strategy.
"The board wanted to focus on organic growth out of our existing business. Anything outside of our existing business in the region is not part of our strategy at this stage," he said.
The acquisition announced in November last year, was part of Hyro's strategy to expand into the Asian markets. Indigo has a strong presence in Singapore, Malaysia and China. Under the original arrangement, Hyro was to pay $4 million upfront, with an additional $1.5 payable in 2009 and another $1.5 million in 2010 based on projected revenues of the Indigo Group of $17.5 million and $19.5 million, respectively.
Indigo Pacific CEO, Hugh Millikin, was disappointed the deal had been abandoned but was optimistic about the company's future.
"The two businesses were perfect for each other - we provided the missing piece in the total solution and had put a lot of time and energy into the acquisition," he said. "But with rising interest rates and talk of recession in the US, businesses in our space that target the cost-conscious do really well."
Indigo has doubled its staff in China in the past year and is ahead of its financial forecasts, Millikin claimed.
"We'll go back to plan A, which we've been doing for the past 20 years of our company's growth," he said.
Meanwhile, Hyro has appointed a new CEO, Bill Votsaris, and deputy CEO, Nathan Brumby. Current CEO, Joe Calavassy, will continue to advise the company board as a consultant.
Votsaris was the CEO of Synergy prior to Hyro's acquisition of the company in May last year. Brumby comes to his new role with Australian and US leadership experience within publicly listed technology and services companies.
"With our two main business engines being in Sydney and Melbourne, we will now have active management in both centres," Clarke said.