Hal Group is set to expand into the Victorian market following a $1.3 million deal to acquire Melbourne-based IT services provider, BusinessWorks.
Australian Securities Exchange (ASX)-listed Consolidated Operations Group (ASX:COG), which owns Hal Group, told shareholders on 29 January that it had exchanged binding contracts for the acquisition of the Melbourne reseller.
Based in the suburb of Camberwell, BusinessWorks specialises in cloud services, managed IT services, IT solutions and hardware repairs.
The deal, which is expected to settle “within the next couple of days”, will see BusinessWorks integrated into COG’s 100 per cent owned IT services subsidiary.
“Hal will benefit from the scale and footprint, extracting expense and revenue synergies,” COG’s managing director, Cameron McCullagh, told shareholders in a statement. “This service-related business within COG, whilst viable as a stand-alone division, also brings expertise and resources to the core business of equipment finance broking and aggregation.
"This is a good purchase in terms of gaining critical mass and a presence in Victoria. We do not plan to purchase any other IT services companies as we are focused on what is currently a significant pipeline of asset finance broker purchases."
According to COG, the $1.3 million purchase price represents 3.75 times the normalised pre-tax earnings (EBITDA) of BusinessWorks for the 2017 financial year.
Hal Group, which claims Amazon Web Services (AWS), Microsoft, Cisco and VMware among vendor partners, came about following the acquisition of Computer Care Australia by Hal Data Services, as the company was once known.
The company already maintains a number of offices in Sydney and Perth, with its head office in New South Wales (NSW).
The latest deal not only sees the business extend its geographical presence, but also support COG’s broader strategy to boost its standing in the equipment finance industry for IT solutions along with compliance support and training.
“This is seen to be an important core service both within and external to the group,” the company told shareholders when it first flagged the potential deal on 19 January, while being careful not to name the acquisition target.
"The…transactions illustrate COG’s continued expansion within the equipment finance sector along with the investment of cash held into operating businesses,” the company said at the time.