Looking back on the blockbuster Aussie M&A deals of 2017
In 2017, merger and acquisition activity reached new highs in Australia, with no signs of slowing down in a market worth $120 billion, according to Thomson Reuters Deals Intelligence. ARN recaps the most important deals in the Australian channel and afar - along with some that didn't quite get off the ground.
Australian M&A activity soared in 2017 to its loftiest in six years and is expected to stay strong, as global consolidation in financial services and interest in infrastructure, technology and healthcare continue to drive deals. The country saw mergers and acquisitions worth about $120 billion in 2017, highest since 2011, helped by the biggest takeover in Australia's history - a $25 billion bid for mall operator Westfield from Europe's Unibail-Rodmaco, Thomson Reuters Deals Intelligence shows. The outlook remains promising and, excluding the massive Westfield deal, M&A volumes are expected to climb year on year in most sectors except retail, as stable markets, low funding rates and large pockets of cash help offset any headwinds from global political uncertainty, merchant bankers told Reuters. (Reporting by Paulina Duran; Editing by Himani Sarkar)
Telstra purchased Sydney-based professional and managed services provider, VMtech, in a bid to bolster its network applications and services business. VMtech made a name for itself in the local market thanks to its expertise in the delivery and management of enterprise-grade hybrid cloud, connectivity and security solutions. In November, Telstra also purchased Australian-based GPS and telematics fleet management solutions provider, MTData in a bid to boost IoT growth in the market.
Equinix acquired Australian data centre operator Metronode for $1.03 billion in December in a bid to expand national capabilities across the country. The data centre giant entered into an agreement with Ontario Teacher’s Pension Plan (OTPP), which owns Metronode and operates 10 data centres in Australia across Adelaide, Brisbane, Canberra, Melbourne, Perth, Sydney and Wollongong.
Aconex received a $1.56 billion buyout offer from Oracle, as the tech giant eyed up the Melbourne-based cloud collaboration platform. Terms of the deal will see Oracle and Aconex provide an “end-to-end offering” for project management and delivery that enables customers to effectively plan, build, and operate construction projects.
Deloitte went on an acquisition spree in the tech sector this year, buying Australian Concur partner, Nesoi, as the consulting firm inked a new alliance deal with the SAP-owned travel, expense and invoice management software-as-a-service (SaaS) firm. In December, Deloitte also purchased local software developer, Well Placed Cactus and in October, the business bought Australian IT consultancy, JKVine, in a deal aimed at building out a new platform test and optimisation unit in Deloitte Consulting. In May, Deloitte also added boutique managed services provider Strut Digital, as the consultancy house continues to bolster its cloud practice across Australia.
As part of its self-professed plans to become a “powerhouse” for Oracle Cloud across the Australian and New Zealand markets, PrimeQ bought fellow local Oracle partner, CRMNow in December. With offices in Sydney and Melbourne, CRMNow focuses on customer relationship management (CRM) software, and claims DXC’s Red Rock and PandaDoc as its vendor partners, along with Oracle.
Melbourne IT unveiled plans to acquire digital marketing agency WME Group, with the ASX-listed domain name registrar raising new capital to fund the $39 million deal. As a provider of end-to-end digital marketing solutions including search engine optimisation (SEO), search engine advertising and web design, WME Group’s market-facing brands include WME, Nothing But Web and Results First. In February, Melbourne IT, bought out the remaining 24.9 per cent of app developer, Outware, to finalise the 100 per cent acquisition of the company.
In November, Macquarie Telecom, through its subsidiary, Macquarie Cloud Services, made a bid to acquire cloud solutions provider, Bulletproof for $17.9 million. However, Bulletproof established an independent sub-committee of the board, due to Macquarie Cloud Services' pre-existing holding of a "relevant" interest in 16.47 per cent of voting shares in Bulletproof through an entity affiliated with its CEO, Anthony Woodward. The Bulletproof Board agreed to open a "data room" in order to facilitate due diligence reviews by parties considering making alternative offers to the one from Macquarie (ASX:MAQ). It also insisted shareholders should wait, and not take any action as there is more than a month until Macquarie's offer closes on 31 January.
ASG Group completed its $124 million acquisition of SMS Management & Technology. SMS and ASG integrated into a single operating business, a process that took around three months and was led by head of operations, Andrew Rose.
The acquisition came after a drawn out bidding war between fellow publicly-listed Australian IT services player, DWS (ASX:DWS) and ASG, which is owned by the Japanese company Nomura Research Institute (NRI).
Sydney-based managed services provider, CustomTec, completed its first acquisition, buying Dimension Data’s mid-market hosted desktop service business in Australia. The acquisition was completed on 30 September and operations were transferred from 1 October with the majority of the personnel and all data centre infrastructure absorbed by the MSP.
Canberra-based cloud services wholesaler, Vault Systems, sold 23 per cent of its stake to Moelis Australia Government Infrastructure Fund, which was established by financial services and ASX-listed provider, Moelis Australia. Until now, Vault Systems was a private company owned by founder and CEO Rupert Taylor-Price, who got the remaining 77 per cent of the company.
Adelaide-based systems integrator, Vintek, acquired Regal IT in December, a managed services provider based in Sydney. In June, Vintek revealed that it was looking to acquire Hostworks early in the year, but lost the bid to Inabox “by just over $1 million”, according to Paul Vinton, Vintek’s founder and CEO.
Credit: Cirrus Networks
Cirrus Networks struck a deal to acquire Canberra-based systems integrator, Correct Communications, in a share purchase agreement set to be worth up to $5 million. Founded in 2010, Correct Communications provides networking, storage, security and unified Communications infrastructure to Government and large enterprise customers in the Canberra region. The Western Australian company also bought Victorian IT solutions provider, NGage Technology Group for $2.5 million.
The Citadel Group entered into an agreement to acquire Brisbane-based Charm Health, which supplies specialist oncology e-health systems. Terms of the deal see the business make an $8.2 million upfront payment, with additional payments to be made for agreed over-performance, staggered over the two years following completion.
Managed communications, cloud and IT provider Inabox Group bought Hostworks Group from BAI Communications, in a move aimed at strengthening its cloud offering. The $7 million purchase of the digital media solutions business, sees Inabox yield strategic business synergies and cross-selling opportunities as the company gains access to Hostworks' large enterprise customers such as Seek, Carsales, Ticketek, Foxtel, AHL and Seven Media. Additionally, the deal will see Inabox leverage Hostworks' cloud infrastructure along with its existing relationships with key vendors, spanning AWS, Microsoft Azure, IBM Softlayer and Google Cloud Platform. Inabox also bought Perth-based cloud managed service provider, Logic Communications, for $1.5 million. The acquisition doubled the number of Inabox's engineers based in Western Australia and extend its cloud capabilities in the state.
Cloud cost management and efficiency platform provider, Cloudability, acquired Brisbane-based Australian Amazon Web Services (AWS) partner, Cloud Manager (CloudMGR), in a bid to tap the burgeoning cloud market in Australia and New Zealand. Cloudability, headquartered in Portland, Oregon, in the United States, specialises in tools aimed at helping companies manage cloud spending across departments, products and infrastructure.
Sydney-based, Correct Solutions, acquired fellow IT provider, Saturn Alliance, as part of a growth push, netting two companies in two months. Saturn Alliance is a Sydney-based IT support Microsoft partner, with a long-standing relationship with Correct Solutions. In March, the business merged with IT provider Analitix in a move to expand its customer base.
The office supplies arena saw some hot M&A activity this year. The Australian competition watchdog gave the parent company of Winc the green light for its proposed acquisition of fellow office supplies retailer, OfficeMax. While it remains to be seen whether the decision will result in a potential bidding war for OfficeMax, the ACCC said it would not oppose a proposal by competing retailer, Complete Office Supplies (COS). US-based private equity firm, Platinum Equity, struck a deal to acquire Staples’ Australian and New Zealand operations in March, subsequently rebranding the business as Winc. In April, Platinum Equity moved its local office retail play up a gear, inking a deal to acquire Office Depot’s OfficeMax business in Australia and New Zealand. However, Complete Office Supplies’ own proposed acquisition for the business was given the green light by the ACCC on 16 November.
South Australian Microsoft partner, Calvert Technologies, boosted its capabilities and market reach following the acquisition of Adelaide-based reseller, Vivid IT. The deal is expected to expand Calvert’s capacity, especially expanding into the real estate industry.
The ASX is set to play host to one of the country’s latest tech consolidations, with the merger of five different telco resellers that together aim to launch a $7.5 million initial public offering (IPO). The five companies set to make up the new entity, CommsChoice Group, include its namesake, CommsChoice, along with Telegate, Telaustralia, Oracle Telecom and Woffle. Together, they are expected to create an entity with combined annual revenues of almost $28 million. With offices in Sydney, Melbourne, Singapore and the Philippines, CommsChoice is an enterprise-focused telco and IT provider, specialising managed data and voice solutions and unified communications services.
Asset management technology company, K2fly gobbled up Perth-based software company, Infoscope, in a $1.25 million deal. Under the terms, K2fly will pay $625,000 in cash together with the issue of $275,000 worth of shares in K2fly, and the issue of $350,000 unlisted options. This will see K2fly make an entry into the mining industry with Infoscope’s data collaboration platform.
As it made its debut on the ASX in June, Field Solutions Holdings made its first acquisition with enterprise wireless network services provider, BMS Network Solutions. The purchase was a part of its plans to bulk up its regional presence, as BMS provides enterprise, carrier-class wireless network design, construction and management services, predominantly in rural and regional Australia.
ASX-listed Dreamscape Networks spent $4.45 million buying the entities and business assets of Sydney-based Enetica Group in a deal that includes Web City, Enetica and Host1. Enetica Group is a hosting and domain business, privately held by Bucan Holdings. The acquisition is expected to expand Dreamscape’s hosting footprint in Australia and the business will be integrated into its Net Logistics infrastructure, operations and management, which is expected to take place in March next year. In June, Dreamscape also netted Singapore-based hosting and domain services company, the Vodien Group, for $29.67 million.
Synnex Corporation completed plans to become a minority shareholder in the Asia Pacific business of Westcon-Comstor, finalising a ten per cent stake for US$30 million. In addition to the regional agreement, the distribution giant also wrapped up the acquisition of the Americas divisions - spanning North America and Latin America - in a deal valued at US$800 million. The local and regional business of Westcon-Comstor will remain under Datatec ownership, alongside Europe, the Middle East and Africa (EMEA). Specifically, US-based Synnex - which operates independently from the Taiwan-headquartered company operating across Australia and New Zealand (A/NZ) - paid for minority ownership of Datatec's Westcon APAC and EMEA divisions.
Australian software vendors, SmartTrans and Resource Connect, reached a $16.6 million merger agreement that saw both companies boost their field services management platform prowess. SmartTrans, which is publicly-listed on the Australian Securities Exchange (ASX), provides transport and field service management software solutions, while Resource Connect is a personnel supply chain management solution software provider.
A bidding war erupted between NEXTDC and 360 Capital Group for control of Asia Pacific Data Centre Group (APDC). NEXTDC went so far as to submitting an application to the Australian Government’s Takeovers Panel, which declined to get involved, and 360 eventually got its way, but it won't be a smooth process. APDC revealed it spent almost $1.4 million in fees related to the buyout proposals from both companies.
NEXTGEN bought Sydney-based digital creative agency Bang Australia, as the distributor expands its marketing capabilities across the wider channel in Australia and New Zealand (A/NZ). Based in Surry Hills, the agency - launched in 2001 - specialises in building digital marketing strategies within the technology sector, backed up by a core team of designers, developers, writers and producers. Since striking a partnership in mid-2014, the acquisition represents a natural progression of the NEXTGEN Create brand, set-up to offer marketing services to the channel.
Hewlett Packard Enterprise (HPE) struck a deal to acquire privately held hyper-converged infrastructure provider, SimpliVity, for $US650 million which, at the time of writing was worth almost $AU860 million, in cash. HPE revealed on January 17 that it had a definitive agreement to acquire SimpliVity, with the transaction expected to close in the second quarter of HPE's fiscal year 2017, subject to regulatory review, approval, and other conditions. The tech giant also revealed plans to acquire Nimble Storage, a vendor of all-flash and hybrid flash storage products, for US$1 billion in an effort to pump up its offerings in those areas. The offerings will work alongside technology that HPE acquired from 3Par, which also is centered around provisioning. Furthermore, HPE bolstered its hybrid IT capabilities through the acquisition of Cloud Technology Partners (CTP), a consultancy firm specialising in migration to Amazon Web Services (AWS).
Cisco made an array of acquisitions this year, including buying India-based cloud solutions provider, Cmpute.io, as part of a broader push to bolster its cloud offering. The business also made a play for BroadSoft, as the tech giant attempts to reinvent itself as a software and cloud vendor. Expected to close during the first quarter of the calendar year 2018, the US$1.9 billion buy builds on six previous acquisitions during 2017, including application intelligence specialists AppDynamics in January. Specifically, the deal - coming four days after the acquisition of data streaming start-up Perspica - will allow Cisco to capitalise on the expanding collaboration market, leveraging service providers to target small and medium businesses.
Microsoft unveiled plans to acquire cloud monitoring and analytics start-up, Cloudyn, in a move designed to bolster customer and partner management capabilities in Microsoft Azure. Microsoft also bought Deis in 2017, a company that makes tools to work with the Kubernetes open-source container orchestration system. The deal marks its continued interest in container orchestration. Redmond also bought Simplygon, a Swedish maker of three-dimensional (3D) solutions used in games graphics engines and virtual reality applications.
Autotask and Datto unveiled plans to join forces, with the mega merger set to shake-up the managed services market across the channel. Terms of the agreement sees Datto be acquired by Vista Equity Partners, an investment firm focused on software, data and technology-enabled businesses. As a result, the vendor now comes under the same roof as Autotask, which has been owned by Vista since June 2014, combining back-up and disaster recovery solutions with IT service management capabilities.
Intel's finally washing its hands of McAfee after seven up and down years, which included a lawsuit last year from John McAfee, after whom the company is named. The chip maker divested its majority holdings in McAfee to investment firm TPG for US$3.1 billion in April. Since then, McAfee turned its focus on the cloud with its move to acquire cloud security specialist, Skyhigh Networks. The companies announced on 27 November that they had struck a definitive agreement to combine their businesses for an undisclosed amount.
This year, Intel bought a 15 per cent stake in Netherlands-based HERE, a company that makes digital maps and location-based services for semi- and fully autonomous vehicles and the internet of things (IoT) industry. And the vendor also bought self-driving automobile technology developer Mobileye, as the tech giant edges towards a connected car reality. For a fee of US$15.3 billion, the vendor purchased approximately 84 per cent of Mobileye’s outstanding ordinary shares.
Juniper Networks announced intentions to acquire Cyphort, a Santa Clara-based start-up that offers an advanced threat detection, analytics and mitigation platform. According to the networking specialists, the acquisition will see the vendor integrate Cyphort’s technology with its Sky Advanced Threat Protection (ATP) product line.
On 17 November, Broadcom finally closed its acquisition of network gear maker, Brocade Communications Systems, giving it a larger share of the data center products market. Broadcom, which made a US$103 billion unsolicited bid for smartphone chip supplier, Qualcomm, which was rejected. The company then agreed to buy Brocade in November last year and won US antitrust approval in July. But in October, Brocade and Broadcom withdrew and re-filed their joint voluntary notice to the Committee on Foreign Investment in the United States (CFIUS) to allow more time for review and discuss the proposed acquisition.
Superloop acquired GX2 Holdings and its subsidiaries for $12 million. GX2 is a provider of Wi-Fi services for major hotel chains, student accommodation sites and schools. GX2 (formerly known as Global Gossip), has offices in Australia, UK, US, New Zealand and Fiji. Earlier in the year, Superloop also bought telecommunications infrastructure company, SubPartners, in a move to expand its international capacity for US$2.5 million.
DDLS, the information and communications technology training business formerly owned by Dimension Data, was acquired for $4.7 million by asset management company, Arowana International. This is the second time the training provider changed hands, since it was purchased more than a year ago by the Australian College of Training and Employment (ACTE) Group from Dimension Data. As a result, DDLS CEO Mal Shaw, announced his departure in December.
Accounting software company, MYOB entered into a sale and purchase agreement to acquire payment solutions company, Paycorp for $48 million. The acquisition is in line with its corporate strategy of providing “innovative solutions” to clients and follows the launch of its PayDirect Mobile and PayDirect Online solutions.
Just weeks after striking a deal to buy conferencing and collaboration provider, Conference Call International (CCI), Australian telecommunications player, MyNetFone has flagged plans for more acquisitions.
It didn't quite go to plan, but it's still worth mentioning the two private equity firms that were engaged in a bidding war for Vocus Group (ASX:VOC), both bowed out of the race for the Australian telco. Vocus found itself at the centre of a bidding war in July, after receiving an acquisition proposal from Asian private equity firm, Affinity Equity Partners. Just a month earlier, Kohlberg Kravis Roberts & Co (KKR) revealed plans to acquire Vocus Group, with the US-based private equity firm tabling a $2.1 billion buyout proposal. The publicly-listed company told shareholders that although the bidders indicated support for Vocus’ management’s strategic plans and transformation program throughout the due diligence process, both bidders have now advised that they are “unable to support a transaction on terms acceptable to the board”.
Accenture grew its strategy services business through the acquisition of US-based wireless, mobility and broadband consulting firm, IBB Consulting, which also has a presence in Australia.
In September, Brisbane-based managed cloud services provider, Fluccs, geared up for an east coast expansion after acquiring three new business brands in a push to expand its capabilities and national presence. The purchases involved server provider, Exigent Australia, and two associated brands: infrastructure-as-a-service provider, Virtual DataCentre; and cloud server provider, 10TB Servers. The deal for the new brands is likely to increase Fluccs’ turnover and client base by roughly 50 per cent.
Enprise Group bought into Sydney-based reseller quoting platform iSell, paying $673,420 for a 14.6 per cent stake. A cloud-based quoting system used by the IT reseller market in Australia, New Zealand and the United Kingdom, iSell generates customer quotes for over 4.5 million products from more than 2000 vendors. The move follows Enprise's November investment in cloud-based VOIP phone and virtual PABX provider Vadacom. In that transaction, Enprise paid NZ$223,737 for a 6.49 per cent holding. Enprise is now invested in five businesses – the wholly owned Enprise Solutions, joint ventures Datagate Innovation and Kilimanjaro Consulting, and holdings in iSell and Vadacom.
Australian telco, Pivotel, ramped up its efforts in the satellite data communications market through the acquisition of US-based satellite provider, Global Marine Networks (GMN). The value of the deal was not disclosed. As well as GMN’s product portfolio, the acquisition also involves its team of developers including the GMN RedPort brand of satellite Voice over Internet Protocol (VoIP), data routers and services.
Rackspace struck a deal to acquire managed hosting services and data centre provider, Datapipe, in a bid to expand its global reach and multi-cloud capabilities. While the value of the deal remains undisclosed, Rackspace claims it is the largest in its history, and it brings “important new capabilities” to the managed cloud provider.
j2 Global sold its Australian hosting business to wholesale web service platform provider, Hostopia. It is understood that Hostopia Australia, which is owned by US-based services provider, Deluxe Corporation, acquired j2 Australia Hosting in August, netting the company’s two brands in the local market, Web24 and Ausweb, in the process. In addition, j2 bought into Sydney-headquartered cloud provider, CloudRecover, to expand the company's back-up presence across Australia and New Zealand.
Servers Australia purchased the dedicated server and cloud hosting business from Axelera, for an undisclosed sum. This is the second largest acquisition for Servers Australia in 2017 following on from its purchase of OzServers in September. Servers Australia said the deal was part of their ambition towards becoming the largest privately owned dedicated hosting provider in Australia.
After rumours of acquisition interest from the likes of NEC, Civica Group was snapped up by investment management firm, Partner Group, in a deal worth £1 billion ($1.64 billion). The UK-headquartered software, digital solutions and outsourcing services provider was acquired by Canadian pension fund firm, OMERS Private Equity, in 2013 for £390 million. An auction of Civica reportedly kicked off with NEC and Berkshire Partners among those bidding for the company, with the Swiss asset management firm eventually coming through as the winning bidder. While the deal sees a wholesale ownership shift for Civica, the company’s CEO has maintained that it will be business as usual for its 3700-strong workforce and thousands of customers.
Sonus Networks completed its journey to becoming Ribbon Communications, following its merger with GENBAND, which closed on 27 October. The new combined entity changed its official corporate name to Ribbon Communications on 28 November, with its common stock ticker symbol on the Nasdaq Global Select Market set to change to “RBBN” effective from the commencement of trading on 29 November.
ASX-listed HJB Corporation told shareholders on 10 September it had executed a conditional agreement to acquire Janison Solutions, an integrated learning and digital assessment business. The reverse takeover deal is worth $26 million, and is conditional upon HJB’s undertaking a capital raising effort of a minimum of $8 million. Upon completion and approval, HJB will change its name to Janison Education Group Limited, and its ASX ticker to JAN.
Melbourne-based cloud migration specialist, Motopia, finalised its deal to acquire Western Australian systems integrator and fellow cloud data migration technology provider, Cirralto Business Services. Cirralto, which is registered in Perth, provides technology consulting services to businesses wanting to enable mobility in their workforce and migrate their technology to cloud platforms such as Xero and Microsoft Dynamics.
Five months after announcing its intentions to buy Apple reseller, MyMac Australia, Singapore-headquartered Apple electronics retailer, Story-i, pulled the plug on the $2 million deal. The deal was subjected to a number of conditions, including approval from Apple and shareholders along with the completion of due diligence by both parties. Story-i did not elaborate on the reasons behind the decision to terminate the proposed acquisition.
Riverbed Technology acquired Wi-Fi network provider, Xirrus, in a move to expand its software-defined wide area network (SD-WAN) and its cloud networking solutions, such as SteelConnect. Following the merger, the company said its customers and partners can expect strengthened unified connectivity and policy-based orchestration, spanning the entire distributed network - WAN, LAN/WLAN, datacentre and the cloud.
Australian publicly-listed big data company, Invigor saw a surge in new deals thanks, in part, to its $10 million acquisition in retail e-commerce analytics startup, Sprooki. The company, which counts itself as a Cisco partner, announced the acquisition in April, saying at the time that the move was aimed at giving retailers an antidote to increased competition from new entrants such as Amazon.
Nearly four years after selling Motorola off to Lenovo, Google is buying into yet another longtime Android partner. But instead of purchasing HTC outright, Google is buying its brains for $1.1 billion to bolster its hardware push. HTC’s mobile team has a long history with Android. It also boasts a solid track record for producing flat-out excellent phones and tablets, often in direct collaboration with Google.