Melbourne-based cloud migration specialist, Motopia (ASX:MOT), is “near finalisation” of its deal to acquire Western Australian systems integrator and fellow cloud data migration technology provider, Cirralto Business Services.
Cirralto, which is registered in Perth, provides technology consulting services to businesses wanting to enable mobility in their workforce and migrate their technology to cloud platforms such as Xero and Microsoft Dynamics.
It is also the owner of a technology solution called Flashconvert, which migrates legacy, on-premise accounting data files to cloud accounting platforms.
Motopia, which is publicly-listed on the Australian Securities Exchange (ASX) and describes itself as a Software-as-a-Service (SaaS) company that provides technology designed to cloud-host and modernise customer sales and stock systems, announced its intent to acquire Cirralto late last year, executing a binding agreement on 10 November 2016.
The company said that the aim of the move is to become a “major IT modernisation services provider”.
According to Motopia, the impending acquisition is a result of the company’s longstanding relationship with Cirralto, with the businesses working together since December 2014, when they signed an agreement to commercially deploy Motopia’s data migration software via the cloud.
Since then, both businesses have worked collaboratively to acquire customers and promote a joint technology services offering.
Motopia told shareholders late last year that Cirralto’s business model is “completely aligned” with the company’s vision of legacy data migration and that its Flashconvert technology is complementary to some of its existing data migration technology offerings.
“A merger of the company’s technology with Cirralto’s technology and services is expected to provide significant growth and revenue opportunities for the merged company and result in value accretion for shareholders," the company said.
“Cirralto’s business has been growing considerably, with FY2017 revenue expected to exceed $1 million,” it stated.
According to Motopia, the prospect of both parties marketing their platforms to each other is expected to provide “significant synergies and provide a value uplift” to existing shareholders and further leverage the company’s value proposition in data conversion and migration services.
“The activities of Cirralto are entirely complementary to the company’s current legacy data conversion assets and the merger of both parties’ products/technologies allows the combines entity to have an expanded and more complete data migration offering,” it said.
As a result of the impending acquisition, Motopia non-executive director, Adrian Floate, has assumed the role of executive director, and Cirralto director and co-founder, Francis DeSouza, joins the company as a Motopia executive.
Marcus L'Estrange, Shaun Melville and Stephen Dale all remain as non-executive directors of Motopia.
“After many months refining both the merger arrangement and the go-to-market strategy, we now have both the operating framework to build more customers and add more services, as well as early and substantial revenues with more promising partnerships in the pipeline,” Floate said.
Motopia told shareholders on 23 march Cirralto has signed a “significant reseller agreement” with an international e-commerce vendor, which Motopia said will provide a catalyst for future revenues to the merged company.
Under the terms of the freshly-inked reseller agreement, Cirralto will undertake a pilot program with the vendor to provide e-commerce migration and enablement services to a number of business customers wanting to migrate and move e-commerce platforms.
On 1 March, Motopia announced the financials for its half-year ending 31 December 2016, reporting $37,955 in revenue and a loss before income tax of $766,758. The company reported zero revenue for the same period the previous year, and $67 in "other" income.
During the 2015 financial year, the company receive a legal claim filed in the County Court of Victoria from GWT Systems, against the company, seeking "unspecified compensation" for alleged funds payable.
The claim was settled in the December 2016 half-year period, with the board agreeing to a total cash payment of $60,000 and 10 million pre-consolidated shares in Motopia.
As Motopia was unable to issue any new shares under its 15 per cent placement capacity, the shares were transferred to GWT from existing shareholders. Motopia will be issuing these shareholders 10 million new shares of which 100,000 will follow post consolidation.
Both companies expect the acquisition to be made complete on 30 June.
At the time of writing, Motopia’s shares were trading at $0.05.