Managed IT and cloud communications company, Inabox Group Limited (ASX:IAB), has bought Hostworks Group from BAI Communications, in a move aimed at strengthening its cloud offering.
The $7 million purchase of the digital media solutions business, sees Inabox yield strategic business synergies and cross-selling opportunities as the company gains access to Hostworks' large enterprise customers such as Seek, Carsales, Ticketek, Foxtel, AHL and Seven Media.
Additionally, the deal will see Inabox leverage Hostworks' cloud infrastructure along with its existing relationships with key vendors, spanning AWS, Microsoft Azure, IBM Softlayer and Google Cloud Platform.
“The acquisition of Hostworks fits firmly with Inabox’s vision to be a leading managed communications, cloud and IT services provider for SMEs and corporates as the demand for cloud-based services continues to grow,” said Inabox CEO, Damian Kay.
“For most companies, investment into next-generation products and services remains necessary to stay at the forefront of an emerging market. Hostworks is a great company. It provides a strong offering of cloud-based products to a range of established blue-chip customers.
“More and more of the companies we work with are moving towards the cloud to reduce capital expenditure on infrastructure and take advantage of the convenience of cloud services, such as increased scalability and reduced maintenance costs,” he said.
“We don’t just want to cater for this trend - we want to be the best at it. That’s why we bought Hostworks,” he added.
In terms of growth strategy, Inabox said Hostworks will continue to operate as a standalone business and brand, forming part of Inabox’s direct channel offering.
According to Inabox, Hostworks is expected to contribute in excess of $3.5 million EBITDA in its first full year as part of the Inabox group.
In line with its plans for targeted geographic expansion, Hostworks’ strong presence in South Australia also provides an established base for Inabox to increase its footprint in the local market.
The merger also sees 92 employees merged within Inabox, growing the total staff of the combined businesses to 300.
“We look forward to helping Hostworks achieve even greater success by leveraging the Inabox geographic presence and sales capability,” Kay added.
“I am very proud and excited to welcome Hostworks into the Inabox Group family, and we look forward to working closely with the BAI team to ensure a smooth transfer of operations,” he said.
Inabox has had a relatively successful track record with acquisitions. The company built out its IT and cloud services offering after buying Anittel for $9.88 million in November 2014.
At the time, Kay said the deal opened the opportunity for broader acquisitions in the IT space, as Inabox was previously limited predominantly to the wholesale telecommunications industry.
In early January 2016, the company also made a key appointment in former Telstra digital manager, Chris Ford, to spearhead the business’ focus on digital as Inabox chief technology officer.
The company said at the time that the new appointment was key to its strategic move to up the ante in the digital space.
According to Kay, Ford brought with him a wealth of experience and knowledge from previous roles with Telstra and Alcatel-Lucent.