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Consolidation heats up the channel: three months of tech acquisitions in Australia

Consolidation heats up the channel: three months of tech acquisitions in Australia

All the M&A activity in the September quarter

Credit: Dreamstime

ASI Solutions’ acquisition of Canberra’s Forward IT at the beginning of October followed a September quarter awash in mergers and acquisition activity. Rhipe, Spirit Telecom and Pivotel were among the local tech players making purchases in the three months ending September.

Spirit swallows Arinda

First off the block in the September quarter was Spirit telecom, which announced its $2.6 million purchase of managed services provider (MSP) Arinda IT at the beginning of July. 

Under the deal, which closed on 12 July, Spirit coughed up $2.1 million in cash for Arinda -- roughly $100,000 less than Arinda made in revenue in the last financial year, according to Spirit. 

At the time of the acquisition, Arinda, which is the trading name of Bigscreensound, had 300 customers and 12 members of staff working across Melbourne, Sydney, Perth, Tweed Heads and Byron Bay. The company has partnerships with the likes of Microsoft, Eaton, Toshiba, Ruckus Wireless and Cisco.

Reverse takeover for MSY Technology

On 5 July, computer hardware and software retail group MSY Technology took a major step in its quest to get a back door listing on the Australian Securities Exchange (ASX) by entering a reverse takeover deal in which it would be acquired by ailing publicly-listed mining company Lanka Graphite.

MSY has been around for more than 22 years selling computers, computer parts and software. It has an online store to complement its 28 physical retail outlets across Australia. 

At the time of the announcement, the acquisition price had shifted upwards by $2.3 million, to $19.8 million, since Lanka first announced its intentions to acquire MSY in August last year for $17.5 million.

However, the deal has since hit a snag, with the ASX subsequently suspending Lanka Graphite from trade to look into the proposed takeover. The Dandenong-headquartered business generates revenues of about $100 million per year.

Dreamscape Networks gets $105.2 million offer

On 24 July, ASX-listed domain name, hosting, online services and solutions provider Dreamscape Networks revealed it had received an acquisition proposal from US-headquartered Web.com Group for all Dreamscape shares.

The $105.2-million acquisition was unanimously recommended by the Dreamscape independent board committee in the absence of a superior proposal prior to the scheme meeting.

“With a significant premium to the current trading price, Web.com’s offer provides Dreamscape shareholders with certainty of value and the opportunity to realise their investment in full for cash," Dreamscape chairman Peter James said.

On 7 October, Dreamscape told shareholders that Web.com had received written confirmation that the Commonwealth Government does not object to the deal, although it is still subject to a number of other conditions before it can be pushed through.

Pivotel takes two telcos

In August, Gold Coast-based telecommunications provider Pivotel revealed it had made a major play for global expansion through the acquisition of two US-based mobile telcos for an undisclosed amount.

The local telecommunications provider snapped up MVS USA and Explorer Satellite Communications in a move intended to increase scale in North America while opening routes into Latin America and Europe.

“Through acquisitions such as these we are able to access new technology capabilities as well as new markets,” Pivotel CEO Peter Bolger said. “In the telecommunications business, scale is always important.

The acquisitions are expected to bring Pivotel’s annual revenue up to more than $120 million over the next financial year.

Rhipe reveals $5 million software company buy

In August, Rhipe revealed plans to acquire Melbourne-based software company Network2Share for a total consideration of $5 million. 

Network2Share is a software developer established in 2013 with a focus on delivering data security solutions for managed services providers.

Rhipe said at the time that it expects the acquisition will provide it with new and differentiated IP that will be exclusively available in Asia Pacific via Rhipe’s Platform for Recurring Subscription management (‘PRISM’).

It is anticipated that resellers will be able to use PRISM to sell, provision and bill their end users for SmartEncrypt alongside other PRISM-enabled software solutions. 

The deal announcement followed Rhipe’s move in January to acquire Queensland-based Microsoft partner Dynamics Business IT Solutions (DBITS) in a $4.5 million deal, potentially rising to $8 million.

Uniti’s $100 million FttP play

In August, Uniti Group, formerly known as Uniti Wireless, announced it will pay $100 million in total for the fibre-to-the-premises (FTTP) builder and operator LBN Co, a move that came five months after a failed bid for telco carrier Spirit Telecom. 

Based in Sydney, LBNCo offers internet service to 418 multi-dwelling units and 65,000 premises on residential estates, with a pipeline to add a further 22,000 premises over the next two years.

At the time of its acquisition announcement, Uniti claimed LBNCo had multiple retail service providers (RSP’s) connected to its network, supplying voice and high-speed data services to consumers and small businesses and projected earnings of $10.1 million this year.

The deal eventually closed on 1 October, with the publicly-listed internet service provider telling shareholders it will continue pursuing further earnings accretive acquisitions.

Field Solutions Holdings extends network reach with two purchases

Finally, at the very end of September, Field Solutions Holdings (FSG) revealed it had snapped up networking companies IP Transit and Ordnance Networks in a deal initially worth around $740,000, but is expected to be worth a combined total in excess of $1.2 million, depending on performance and other factors. 

The acquisition effort is aimed at widening the publicly-listed telco’s Australian network, with the two acquired companies operating a national carrier backbone, as well as offering carrier-specific products, services and software.

David Hooton founded both companies in 2015, Ordnance Networks was co-founded with Lee Campbell-Smith. Both founders have been appointed to unspecified management roles within FSG.


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Tags PivotelFSGSpirit TelecomRhipeRhipe SolutionsDreamscape

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