S Central has been purchased by managed services provider, Brennan IT.
Brennan will acquire the Victoria-based services provider through an asset purchase process – allowing the buyer to acquire assets clear of any liabilities while not buying the business entity itself. Financial details have not been disclosed.
The process also allows Brennan to make the acquisition without shareholder approval, a key contributing factor to S Central’s failed merger with ComputerCorp earlier this year.
The purchase is primarily a mid-market play for the managed services provider, Brennan managing director, Dave Stevens, said. Under the agreement, up to 65 of S Central’s 75 staff will be retained. An outplacement program has been arranged with Chandler Recruitment for those who don’t want to join the newly merged business.
Brennan expects to add up to 50 per cent to its annual revenues as well as extend its customer base and geographical reach into regional centres including Newcastle, Stevens said.
S Central managing director, Peter Mavridis, said the deal allowed it to continue building scale.
“We have been consistent with saying that to grow in this industry, you need scale. We have been trying to achieve that in various ways, and have looked at various businesses,” Mavridis said. “The best fit was Brennan, given the ComputerCorp deal fell over.”
Mavridis will also continue working within the combined organisation for the next couple of years, as well as focus on his personal venture capital business. He denied the deal with Brennan was prompted by S Central’s inability to pay its staff. Last week, industry insiders claimed the company hadn’t paid its full-time employee entitlements.
“That was more of a technical issue, which was resolved quickly,” Mavridis said.
Brennan will seek further acquisitions that provide positive earnings in a minimal time period, have a mid-market focus and are geographically appropriate, Stevens added. The company was featured in this year’s BRW Fast 100 for the sixth year in a row.
The news follows a rough week for the IT channel. Voluntary administrators were appointed to Leading Solutions after ongoing credit and financing issues, while Phoenix Toner and Comsys also closed down.