Western Australia-based Southern Cross Electrical Engineering (SCEE) has bought electrical and communications contractor, Datatel for about $17 million.
The acquisition is made up of an initial consideration of $6.2 million with up to a further $11 million deferred consideration and stretch consideration ($7.5 million) during FY17, FY18 and FY19 for delivery of EBITDA targets.
This will also see SCEE (ASX: SXE) make its foray into the communications and telco sector.
SCEE managing director and CEO, Graeme Dunn, said the acquisition provided a credible platform to enter into other geographic markets. SCEE has pegged the telecommunications sector as a growth market opportunity due to customer demand and tech innovation.
SCEE will support Datatel’s expansion and business into other states as well as look at cross-selling its communication services into SCEE’s client base and operations.
Datatel, which has about 180 employees, made its market debut in 1998 under Paul Johnson and Wayne Hogan and developed significant relationships with key contractors in delivering the NBN including Daly International, Downer, Fulton Hogan, Kordia and WBHO.
Outside of telecommunications, Datatel has a range of clients such as Royal Perth Hospital, Curtin University, University of WA and Department of Education. For FY16, Datatel is forecasting revenue of $22 million and EBITDA of $2.9 million.