ASX-listed DVT Holdings (formerly Davnet) has completed its acquisition of Powerlan's storage subsidiary XSI for $4.6 million. The deal comes as DVT minority shareholder BigShop.com.au launches another attempt to wrestle control from DVT's board of directors.
As reported in ARN (ARNnet, April 30), DVT Holdings' subsidiary the E-Data Group had been in final negotiations to acquire the XSI division for some time. The acquisition follows DVT Holdings' sale of its 51 per cent stake in beleaguered telecommunications business Davtel to Japanese giant NTT for $20 million in cash and stock.
The merger joins two significant pure-play storage companies, with E-Data's focus on tape storage and XSI's focus on disk.
Under the terms of the agreement, DVT Holdings will acquire XSI's stock, property, plant and equipment, select debtors, intellectual property, contracts and goodwill. It will also assume the liabilities of certain employee entitlements and future service commitments under maintenance contracts.
The acquisition also extends E-Data's geographic reach into Perth and Brisbane.
XSI founder and CEO Max Goldsmith will manage the new combined entity, while Garry Humphreys, founder and CEO of E-Data Group, will remain on the board of E-Data to assist with business development and integration according to a statement released to the ASX.
The merger is expected to result in "substantial" cost savings as E-Data and XSI converge their infrastructure and support systems. Mark Hubbard, DVT Holdings' company secretary and board member, said the company will act quickly to eliminate duplicate premises in Sydney, Melbourne and Canberra as well as "consolidating" the entity's combined staff of 72.
Meanwhile, Perth-based e-tailer and services company BigShop.com.au is entrenched in a legal battle with DVT Holdings to requisition a general meeting of shareholders to vote out the existing board of directors. BigShop.com.au tried to requisition a general meeting in March but DVT's existing board thwarted the attempt.
Farooq Khan, managing director of BigShop.com.au, told ARN he is "confident" that the company will succeed in requisitioning a general meeting to decide the fate of DVT's board as legal proceedings are heard in the Supreme Court of NSW. Although he would not be drawn on BigShop's interest in gaining control of DVT, the move would give the relatively new Perth company an established foothold in the Eastern states.
Given the legal proceedings are complete in two to three weeks, BigShop.com.au will be filing a statement of intent to the ASX according to Khan.
However Hubbard dismissed the ongoing battle for board control, claiming Khan does not have the minimum 5 per cent shareholding required to force a general meeting, has failed to meet certain clauses in the corporation law to do so and is in breach of DVT's company constitution.
Khan and DVT's board met in February/March prior to BigShop.com.au issuing a notice to the ASX to requisition a general meeting. At the time Hubbard said DVT's board was sceptical of Khan's intentions for the business, which were described as little more than an attempt to gain control of DVT's significant cash reserves following its Davtel sale.
"He doesn't have a plan, he has an idea," said Hubbard.