It was the merger that should have happened two years ago. But that was before ASX-listed companies Powerlan and DVT Holdings (formerly Davnet) stepped in and acquired XSI and the e-Data Group respectively.
Now the merger of the storage specialists looks to be going ahead, with DVT Holdings in final negotiations to purchase XSI from Powerlan.
Director of DVT Holdings Jean-Marie Simart said the companies have a number of synergies, with e-Data Group's history in tape storage and XSI's in disk. The e-Data Group is made up of storage integrator Dawn Technologies and tape distributor Digital Tape Solutions. Besides integration services, XSI is reportedly one of the largest assemblers of disk-based systems in Australia.
Davnet sold the remaining 51 per cent share of its embattled telecommunications business, Davtel, to Japanese giant NTT in 2001, before changing its name to DVT Holdings. The sale filled DVT's coffers with $20 million, which the company will use to fund its acquisition of Powerlan's storage subsidiary and possibly others, Simart told ARN.
Although Simart stressed the acquisition was not a done deal, with legal representatives from both companies going over the final agreement, there is strong intent from both sides.
Founder and current general manager of Powerlan's XSI division Max Goldsmith, said he and Garry Humphries, managing director of the e-Data Group, had intended to join the companies in 2000.
"We have felt for a while now that if we brought our teams together we'd have the best skills in the industry," Goldsmith said.
The merger comes after the directors of DVT Holdings survived an attempt by minority shareholder Bigshop.com.au Limited to wrestle control of the company through requisitioning a general meeting last month. DVT Holdings described the requisition notice as "invalid".
Meanwhile Powerlan issued a statement to the ASX yesterday outlining its business strategy going forward would include the divestment of its systems integration businesses in favour of developing products and services around the company's own intellectual property.
"The rapid commoditisation and continuous reduction in margins of this [systems integration] business dictates that now is the best time to divest it. We are currently working on a number of opportunities in this regard," Powerlan managing director Theo Baker said.