UXC acquires Red Rock Consulting
- 14 January, 2004 12:01
Listed IT services company, UXC, has acquired one of Australia’s largest Oracle resellers, Red Rock Consulting.
Red Rock, based in Sydney and owned by its four directors Greg Woollett, Jonathan Rubinsztein, Duane Goff and Mike Blenkinsop, will be paid a combination of cash and shares (50 /50) based on multiples of its current earnings, as well as further consideration for Red Rock’s financial performance in future years until the end of calendar 2006.
Neither company was prepared to estimate a more precise value for the acquisition.
Red Rock will now become a part of UXC’s Business Solutions Group, but continue to be managed by its four directors.
“The Red Rock acquisition is one of the more substantial since the formation of UXC Limited and we consider it to be a significant building block in UXC’s Business Solutions Group,” UXC executive chairman, Geoff Lord, said. “Red Rock’s strong capability in the Oracle Technology stack complements our other businesses and the company brings with it significant growth opportunities.”
UXC’s Business Solutions Group includes Eclipse, one of the largest Microsoft Business Solutions software providers in Australia. The listed company also runs; a business specialising in the Utilities sector, a data storage company (XSI), a networking integrator (formed through acquisitions of Integ Communications and Lanlink) as well as several consulting companies (such as PlanPower).
Red Rock director, Jonathan Rubinsztein, told ARN that these complimentary businesses attracted Red Rock’s directors to the acquisition.
After many years of organic growth, Rubinsztein said the directors of Red Rock felt it necessary to “fast track” its growth.
The UXC deal would afford Red Rock the ability to acquire at least two Australian businesses within the next 12 to 18 months, the two companies said in a statement.
“Being part of a listed entity that has no debt on its balance sheet will make it a lot easier to finance our ability to grow our business by acquisition,” Rubinsztein said.
Red Rock’s organic growth had seen it start tackling deals typically left to the larger consulting firms in Australia, but often the company was overlooked due to its relatively small size and lack of capital backing, Rubinsztein said. He is hoping that the UXC backing will boost red Rock’s credibility among very large potential customers.
“Our competitors now are what were once called the big five,” he said. “The larger projects that they bid for start at around $5 million. Often we are not invited or considered because it is not expected that we have the capability. We have, however, completed a number of projects of that size in the past. The backing of a listed company should give us more exposure to these deals.”
All 90 of Red Rock Consulting’s staff would remain with the company alongside its founding directors, Rubinsztein said.
“Greg, Duane and Mike started the company and I joined 18 months later,” he said. “Our investment wasn’t as much capital as it was blood, sweat and tears. We have got a lot out of it – it has been a great journey. We don’t look at this as just a return on our investment; we look at this as the deal that facilitates the next stage in our growth. We are all now significant shareholders in UXC.”