ASX-listed technology company eGlobal International has bought Australian IT security company Citadel Securix for $2.73 million, adding a raft of security products and services to its arsenal.
eGlobal will pay $1.67 million in cash (in instalments) and the remainder through the issue of convertibles notes with an aggregate face value of $1.06 million.
(Convertible notes are loans made to a company at a fixed rate of interest with the right to be either repaid by the company for cash or converted into ordinary shares at a predetermined date or within a certain period.)
As part of the deal, eGlobal has acquired all of Citadel’s intellectual property including a range of security products and managed security services, most notably Citadel’s Xaminer software which allows telcos to intercept traffic passing through their networks as required under the Telecommunications Act.
eGlobal has also acquired Citadel’s 24-hour data monitoring call centre in Canberra where staff remotely manage customers’ firewalls, VPNs, intrusion detection systems, and URL blocking services.
eGlobal managing director, Gordon Chalmers, said Citadel had about 600 active security customers who were mostly based in Melbourne and Canberra. With a strong customer base in Sydney and Brisbane, the Citadel acquisition promised eGlobal much broader market penetration.
“The acquisition gives a much better geographical spread and a tremendous boost to revenues — at least $8 million over the next 12 months,” he said. “Rather than growing organically this allows us to leapfrog ahead.”
The combined IT security operations will henceforth trade under the Citadel Securix brand and continue to service all existing eGlobal and Citadel customers.
Chalmers said that all Citadel and eGlobal staff would be employed.
The acquisition is in line with the developer’s announcement late last year that the eGlobal business would go through a significant realignment.
In September last year eGlobal sold its SAP business, eGlobal Pacific, to British services giant Logica in a deal worth $6.5 million. The SAP business had been a cash cow for eGlobal - contributing $13.6 million of its $17 million turnover last year - and was expected to grow a further 20 per cent this year.
Chalmers said eGlobal was focusing on strengthening its position in the managed security services market in Australia, currently worth more than $600 million and forecast to grow to $1.8 billion by 2005.