Solutions giant snags more deals
- 20 March, 2000 12:49
Ever-expanding IT solutions company Solution 6 is set to loosen its belt another notch after announcing it intends to swallow up Sausage Software in a billion-dollar takeover bid.
The company has also signed a separate deal to acquire Telstra's ebusiness assets and the telco's 30 per cent share in telephony company PlesTel, for $237 million.
As a result, Telstra, which currently owns 24 per cent of Solution 6 and 10 per cent of Melbourne-based Sausage, will end up with 40 per cent of what will be Australia's largest IT company, valued at $3.5 billion and with revenues of more than $800 million.
The takeover bid for Sausage will see Solution 6 offer six ordinary shares for every 10 Sausage shares. A similar offer will be made for all outstanding Sausage options.
Based on Solution 6's Friday closing price, the merger values Sausage shares at $5.73, capitalising the company at $1.6 billion.
As part of the deal, Sausage will be offered two seats on the Solution 6 board while CEO Wayne Bos will be offered a role as director in the new entity.
Under the non-binding agreement with Telstra, Solution 6 will acquire the telco's e-connect business, the global rights to Telstra Financial Management Services and Telstra's 30 per cent stake in its PlesTel joint venture with Plessy Asia Pacific. PlesTel is the developer of the popular Commander phone system.
Telstra will also spend $50 million on further Solution 6 shares at $9.75, and receive 50 per cent of the equity in Solution 6's financial services company, Iguana. An equal number of directors from both companies will be appointed to the Iguana board.
Telstra's convergent business group managing director, Ted Pretty, who will be invited to take up the role of non-executive chairman of Solution 6 at the company's next board meeting, said Telstra planned to take a more aggressive approach to vertical integration opportunities.
Pretty said Solution 6 would be the biggest business of its kind in the Asia-Pacific region, and expected the company to continue its aggressive approach toward acquisitions both locally and overseas.
Solution 6 boss Chris Tyler said the deals created a "remarkable enterprise" that was "second to none" in the global business-to-business arena.
The market reacted favourably to the announcement, boosting Solution 6 shares by almost $3.50 to $13.02. Sausage was also up $1.62 to $7.42 in late afternoon trading.