Sausage stays on acquisition roll

Sausage stays on acquisition roll

Like many growing Australian Internet companies, Sausage Software has caught the acquisition bug and the fever shows no sign of abating.

The Melbourne-based Internet company has launched a bid worth around $220 million to acquire SMS Consulting.

If accepted, the scrip for scrip deal would see Sausage acquire 100 per cent of SMS in exchange for 40 million newly issued Sausage shares.

SMS is an enterprise-level project management and systems integra- tion company with ANZ, Westpac, Commonwealth Bank, and C&W Optus among its list of clients.

It is not known whether SMS will retain its current name or assume Sausage's name if the acquisition is successful.

Sausage's acquisitions last year included HR and developer People Plus in December and Web designer KnowledgeWorks in October.

The company also formed alliances with Telstra and St George Bank in January to market and distribute its e-commerce product.

SMS is owned entirely by its employees. An SMS spokesperson said the deal would only be accepted if 90 per cent of them approved of the acquisition.

According to Sausage chairman Gil Hoskins, SMS has over 650 staff, with revenues of $130 million forecast for this financial year.

Sausage has a services division of only about 50 staff, he said.

`What we're really buying here is a huge reservoir of skill, particularly in technology and project management, which is going to be very good for us,' he said, adding that the strengths of the two companies were well complemented.

`We're a company that can create a lot of work. They [SMS] are fan- tastic at project management and implementation.'

Hoskins said Sausage's acquisition of SMS was, in effect, an outsourcing deal.

`We can already create the e-commerce opportunities, but it's great for us to have a delivery and backup system such as SMS.'

Sausage, which is currently represented in Sydney, Melbourne, Brisbane and Perth, was attracted to SMS' presence in London, Hoskins added.

The SMS spokesperson said it would represent a breach of securities law if the company announced whether or not it intends to accept Sausage's offer.

The spokesperson said the outcome of the bid would not be known for months.

However, if successful, the SMS acquisition would join a fast-growing line of Sausage deals. In addition to the Telstra and St George deals, Sausage also acquired enterprise software company People Plus and Web design business KnowledgeWorks late last year.

Hoskins said these acquisitions did not present any financial risk to the company because they had paid for all acquisitions in shares rather than cash.

With 40 million new shares potentially issued for the SMS acquisition, Sausage's market worth will total almost $1 billion.

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