ASX-listed Internet hosting company Hostworks has acquired Sydney-based hosting provider Interpath Australia in a deal worth almost $3 million.
Interpath Australia, a wholly owned subsidiary of US company Interpath Communications, has offered managed hosting services and digital media services to Australian customers since 1998.
Hostworks, an Adelaide-based company with blue-chip clients such as ninemsn and Ticketek, will pay up to $1.15 million in cash to acquire the company and will also take on the liabilities of the company (mostly equipment leases) valued at $1.736 million.
Hostworks managing director Marty Gauvin said he intends to strip back Interpath's operations to only continue offering services aligned with the Hostworks business. Subsequently, the various small businesses that Interpath had in the past provided shared-hosting for will be left out of the deal. Gauvin said Hostworks was more interested in offering managed services to larger blue-chip clients, and does not want to compete with the plethora of Internet service providers that offer shared hosting to small businesses.
Gauvin will also be selling off Interpath's digital media business. This division worked on location at customer sites, encoding and streaming events such as annual general meetings for corporate clients over the Internet. "That business seemed to be going well," he said, "but we'll be sticking to our knitting."
In the last few months Interpath had shed several staff as it streamlined its operations, and Gauvin said it would be likely he would further consolidate the staff numbers after the acquisition is complete. None of Interpath's senior management, including managing director Mark Franklin, will be joining the team at Hostworks.
Although Gauvin has been pushing to get greater coverage in Sydney, he said the customer base was a more important factor in the acquisition than buying a point of presence in Sydney. "With the relationships we have with Optus and Pihana, needing a data centre in Sydney wasn't so much of an issue," he said. "What we do get is a great customer base and a set of new skills."