ASX-listed integrator, ComputerCorp, has acquired Queensland-based Coretech as it continues to build a footprint across Australia's eastern seaboard.
The purchase price of $2 .4 million includes a $600,000 cash payment, as well as 3.5 million ComputerCorp shares valued at $0.20 each. A further 6 million shares will be issued subject to performance.
Coretech is a state-based reseller focused on SMB and education. Vendor partners include Lenovo, IBM, Toshiba, VMware and Microsoft. It operates four locations in Brisbane, the Gold Coast, Toowoomba and Maroochydore.
"We've always had a strategy of acquiring to strengthen our geographical reach," ComputerCorp eastern region director, Tony Heywood, said. "We needed to bolster our Queensland presence because it's a very strategic market for us. Depending on which vendor you talk to, it represents 10-18 per cent of the SMB and mid-market, which is our stated customer direction.
"Coretech fits nicely into that space - they have a strong government procurement business, are developing a services business and have a strong focus on education, which is something we have a lot of interest in developing nationally. "
Heywood highlighted Coretech's Laptop for Teachers business and preferred supplier status on the Queensland Department of Education and Training desktop PC panel as important customer contracts. The company's direct relationship with Lenovo was another factor.
"We're also trying to be a national Cisco player and Coretech will help us take that technology to Queensland SMB and mid-tier organisations," Heywood said.
As part of the deal, Coretech's three owners and senior management team -- Garry Holmes (CEO), David Wain (sales director) and Stuart Rose (operations director), have agreed to stay until June 2010 and run the Queensland operations.
"Having the management stay on was pivotal for us. We do not have enough local representation with vendors, customers or government in Queensland," Heywood said. "The Coretech management team knows that market inside out."
He said it was also hopeful of retaining most of Coretech's 50 staff. Coretech's Wain said negotiations between the two organisations had been ongoing for some time and had now reached the due diligence stage.
"This is a really positive move for us and good for both organisations," he said. "We're not expecting to have any issues with customers as very little is changing locally. We'll just have the support of a bigger organisation."
The acquisition comes just over a week after ComputerCorp's merger with Melbourne-based player, Leading Solutions, fell over at the eleventh hour.
"We had been discussing this deal with Coretech while the Leading Solutions merger was going on," Heywood said. "If the Leading Solutions merger had gone ahead, the desire was that Coretech would be part the consolidated entity."
ComputerCorp will pursue other acquisitions as it looks to broaden its geographical reach and technology prowess, Heywood said.