Tesserent has claimed to be the largest dedicated publicly-listed cyber security business after purchasing the security division from PS&C for $16 million.
The integration of the PS&C Security business will provide Tesserent with full cyber security capabilities including security advisory, penetration testing, deployment and management of security infrastructure and secure application development.
The acquisition cost will be split into three components - $9 million in cash, $5 million in fully paid ordinary shares and $2 million in cash or shares.
The purchase will see Tesserent expand its client base across Australia, Asia and the UK, adding more than 60 PS&C staff, totalling more than 90 cyber security professionals.
“We are pleased that we have been able to negotiate an outcome that provides our people, clients, and importantly our shareholders a significant opportunity to continue to derive value from what has been an important part of PS&C from the outset,” PSC acting CEO Robert Hogeland said.
“The fact that we have been able to negotiate a meaningful equity component should allow our shareholders to continue to benefit financially from a continued growth in the combined business, is a very pleasing outcome.”
During the 2019 financial year, PS&C Security delivered revenue of $16.4 million and a normalised EBITDA of $3.1 million.
Tesserent managing director Julian Challingsworth said the acquisition was a natural fit for the company, outlining numerous synergies between the two that he expects will add to providing a comprehensive cyber security offering to current and prospective customers.
“The PS&C Security business brings with it some of the best minds in the cyber security sector in Australia and is a key facet of our comprehensive acquisition strategy that we expect to deliver excellent shareholder value moving forward,” Challingsworth said.
The deal is subject to shareholder approval.
PS&C CEO Glenn Fielding resigned from the company in September after it posted a $53 million loss for the year.
In his departing statement to the publicly-listed firm’s shareholders, Fielding acknowledged the PS&C’s balance sheet still “needs work”.
“On stepping into the role, I had definable goals; stabilise the company; bring in an ‘industry' CFO; build a national footprint; refinance; and build value for shareholders.
“I am proud of the fact that we have, to a large extent, done all but achieve short term value for shareholders. We have divested non-core assets; developed a national footprint opening offices in Brisbane and Canberra.”
He added the company had also “significantly improved” the operating structure of its Melbourne business due to its acquisition of the consultancy Seisma in April last year and that the company was now in a position to “restore” shareholder value.
Although PS&C’s revenue rose by 12 per cent to $87.8 million during FY19, the company warned it had a number of hurdles to overcome or it would risk no longer being able to operate.
Previously PS&C divested Allcom Networks to managed services provider Crosspoint Telecommunications for $3.2 million last year.