Melbourne IT snaps up VeriSign's digital brand division for $US50m

Melbourne IT snaps up VeriSign's digital brand division for $US50m

Acquisition to give the domain registrar greater global presence and substantially grow its premium customer base

ASX-listed services provider, Melbourne IT (ASX:MLB), has acquired VeriSign's global Digital Brand Management Services (DBMS) business for $US50 million.

The deal will see VeriSign DBMS and Melbourne IT's existing Corporate Brand Services division integrated into one digital brand services company. The services are targeted at organisations with large e-commerce interests.

Melbourne IT CEO and managing director, Theo Hnarakis, said it had been looking to acquire VeriSign DBMS for the better part of three years.

"Six months ago we saw VeriSign's resolve weakening as it looked to get back to its core business, so in January we entered exclusive negotiations," he said. "We will now have 2500 premium and enterprise customers and 14 offices throughout the world. Being able to offer 24/7 support in all regions is going to be a significant advantage for us."

The acquisition is being funded through credit. Despite the current economic climate, Hnarakis said low loan interest rates from NAB presented an ideal opportunity to make the acquisition with debt.

The VeriSign DBMS business is expected to contribute to Melbourne IT's earnings in 2009. This year, the organisation will invest up to $5 million towards integration and migration and the establishment of datacentre facilities and support services, Hnarakis said.

Hnarakis said it planned to retain all 120 of VeriSign DBMS staff, with Melbourne IT's management team assuming managerial responsibilities. The acquisition and integration could take up to 12 months in some areas, although most will occur within the next six months.

Hnarakis pointed to consolidation in the market recently, with smaller regional players being snapped up by global powers. Melbourne IT has also been on an acquisitions spree, picking up UK-based IDR Management Services in 2007, and applications hosting provider, WebCentral, in 2006.

The domain registrar is open to further sub-$5 million acquisitions over the next 12-18 months, he said.

"We've got a healthy balance sheet and there are other opportunities - we'll continue to take a conservative approach with acquisitions," Hnarakis said.

Prior to the acquisition, nearly 50 per cent of Melbourne IT's revenue came from offshore. Hnarakis said the VeriSign DBMS acquisition will increase this figure to over 60 per cent.

He added Melbourne IT intends to remain firmly focused on IT services.

"Some of our services touch on the digital media space but we don't regard ourselves as a digital media company," he said.

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