In what appears to have been an unlikely bargain sale, ASX-listed PocketMail Group has completed the acquisition of the worldwide PocketMail business from its original Silicon Valley developer, Pocket.com.
The Australian PocketMail business has been a licensee of Pocket.com's technology for just over a year, but recent poor performance by the privately held US developer gave the Australian PocketMail Group the opportunity to buy it.
Paying approximately $US500,000 in cash, as well as 18 million shares and 6 million share options, PocketMail chief executive David Marchant said his company has managed to buy a company 10 times its size, for one-tenth of its capital. At today's market price for PocketMail shares, this values the acquisition at just over $A2.5 million, a large sum for a company that had under a million dollars in cash reserves at the end of the September quarter last year. PocketMail will also take on Pocket.com's liabilities, including debts, severance payments to effected by US employees and obligations to Pocket.com subscribers. The owners of Pocket.com will now own almost 20 per cent of the PocketMail Group business.
Twelve months ago Pocket.com employed more than 80 people, but it now employs little over a dozen. "Pocket.com was underperforming, considering its potential," Marchant told ARN. "We have the opportunity to consolidate the worldwide business with our own and build a global, profitable business."
The acquisition means PocketMail's subscriber base rockets from 7000 to more than 50,000 subscribers, covering the US, Canada, Australia, the United Kingdom, Singapore and Hong Kong. It expects revenues to leap from $A100,000 a month to more than $1 million a month, driving the company towards profitability by the second half of calendar 2001.
Marchant said the PocketMail Group received an almost-unanimous acceptance of the acquisition plan during a shareholder's meeting held a fortnight ago. "Like any company, we have pressure from shareholders to deliver profits quickly," he said. "This [acquisition] means we can achieve those profits considerably quicker than ploughing our field in Australia."
Marchant said resellers who offer retail subscriptions to the PocketMail service will see no changes other than service enhancements. "In acquiring the US business, we now have control of the product development path, and can make PocketMail's global reach available to Australian customers at the price of a local phone call," he said.