ASX-listed integrator, ComputerCorp (ASX: CZP), has acquired Victoria-based education and SME player, Paragon IT and Paragon Systems, for $2.1 million.
The purchase price includes $1.6 million in cash as well as $500,000 in ComputerCorp shares, or 11.7 million shares at $0.04 apiece. The deal is subject to due diligence and board approval.
ComputerCorp eastern region director, Tony Heywood, said Paragon allowed it to grow existing relationships with Lenovo and IBM at a national level, as well as boost its overall Microsoft skill set.
Paragon is also a Cisco partner and has specialist skills in unified communications and SharePoint collaboration platforms.
Combined, Paragon IT and Paragon Systems have 50 staff. Heywood said 10 sales and 20 technical specialists would be kept on but was unable to confirm what would happen to the remaining 20 staff.
As part of the deal, Paragon founder and IT industry veteran, Bill Votsaris, will join the ComputerCorp board.
With 40 per cent of revenue coming from its home state of WA, the deal will give ComputerCorp broader reach into the eastern states. Earlier this year, the company picked up Queensland-based education reseller, Coretech.
There was also little customer overlap between ComputerCorp and Paragon, Heywood said. This opened up the opportunity for delivering new services on both sides.
“Lenovo partners with Paragon on the Victorian Department of Education contract for example, while we have focused on the private schools market,” he said. “We can now parlay skills from both sides for both the public and private sectors.
“With the acquisition of Coretech, we gained unique software for the education market which we can also hopefully deploy across our whole customer base.”
Heywood said ComputerCorp would continue to seek strategic acquisitions that offered geographic reach and didn’t rule out NSW as a target.
Late last year, ComputerCorp raised $5 million in capital to fund its acquisitions strategy.
Heywood brushed aside concerns about spending cash in the face of an economic downturn.
“There are a lot of mid-tier businesses that are not going so well. Combined with a larger entity with infrastructure, it becomes a profitable model,” he said. “With the Leading Solutions discussions, it was such a big deal we were basically merging two companies of the same size. This allows us to develop a bolt-on acquisitions strategy without changing the culture of our company.”