Software-as-a-service (SaaS) provider ReadyTech is to fork over $72 million for Melbourne-headquartered government software specialist Open Office.
As part of the proposal, the Australian Securities Exchange (ASX)-listed ReadyTech will give $54 million upfront and an earn out sum of $18 million for the Pemba Capital-owned company alongside McGirr Technologies, which falls under the Open Office portfolio.
According to ReadyTech, the deal would represent entry into the local and state government and justice sectors, which would sit alongside its current customer base of education and payroll firms.
“ReadyTech’s strategy is to provide mission critical SaaS to targeted markets leveraging its modern technology platforms, all underpinned by its best practices approach to deploying customer-centred software,” the provider said in a statement.
“The strategy has also been focused on identifying additional technologies to expand its reach into different vertical markets to continue its successful track record of expanding into new markets.”
The announcement comes more than a year after ReadyTech listed on the ASX with a market capitalisation of $120.8 million and an initial public offering of about $50 million.
ReadyTech was founded more than 20 years ago. Originally known as JobReady, it launched its first software product in 1999 and counted around 150 staff at the time of its IPO.
Meanwhile, Open Office was founded in1990 and provides government bodies with integrated cloud enterprise solutions. It was acquired by Pemba in 2019 and put together with Pemba-backed McGirr in February this year.
Also a software specialist, McGirr was founded in 1975 and provides case management solutions and e-Services for courts, tribunals and commissions.
To fund the deals, ReadyTech has launched a share purchase plan with the aim of raising around $4 million.
If the proposed acquisition of Open Office does not proceed, ReadyTech, will use the proceeds from the placement to fund other growth opportunities, including potential M&A, the company added.
The acquisition, if completed, is anticipated to be low double-digit EPS accretive in FY21 on a pro-forma basis before synergies and excluding integration costs, it added.