InterFinancial ICT M&A Report >> 

THERE is a lot of M&A (mergers and acquisitions) activity in the information and communication technology (ICT) space at the moment, but multiples seem to be holding steady, according to the latest report from InterFinancial.

At the end of April, the ICT sector traded on a forward price-to-earnings (PE) ratio of 18.3-times (18.3x), compared with the ASX200 on 17.0x, according to assessments on the sector by InterFinancial managing director Sharon Doyle and associate director Hyun-ju Johnson, who are focused on the industry.

Ms Doyle said there was an extraordinary amount of M&A activity building in Australian ICT. 

Vocus Communications has acquired a 14.5 percent stake in Macquarie Telecom Group for $15.62 million via an equity swap. No material impact is expected to Vocus’ statement of financial position and consolidated income statement from its acquisition of the relevant interest.

Fidelity Investments and Smallco have purchased stakes in WiseTech Global, the Australian software developer, ahead of its upcoming IPO, reported to be valued at $785m. Fidelity and Smallco secured 11.3m shares for $35m representing approximately 4.5% of total capital.

M2 Group is believed to have lodged an all-scrip offer for iiNet to counter rival TPG Telecom’s $1.4bn all-cash bid. The new bid is structured as an all-stock proposal with a $0.75 per share special dividend. M2 shares dropped 4.5% on the news, putting the implied offer price at $9.60 compared with TPG’s revised up to $9.55 per share deal – with iiNet shareholders able to elect to receive either $8.60 in cash per iiNet share or 0.969 TPG shares per iiNet share plus a special dividend of $0.75 per iiNet share payable under both options. At presstime, iiNet’s directors had unanimously recommended the revised deal from TPG.

TPG Telecom has acquired an additional 11.9% stake in Amcom at an offer of $2.76 per share for $87.5m in an effort to block the takeover bid by Vocus.

Modun Resources has executed a conditional Sale and Purchase Agreement to acquire LiveTiles from Rhipe Limited. LiveTiles is a software tool that enables organisations to build user interfaces that deploy on top of Microsoft’s cloud collaboration platforms, including SharePoint, Office365 and Azure, enabling organisations to rapidly build and deploy modern business solutions, including intranets and extranets. LiveTiles is reported to be valued at $33.75m and will be acquired in exchange for shares in Modun.

Freelancer.com, the Australian listed freelancing and crowdsourcing marketplace, has acquired Escrow.com from a private investor for US$7.5m in cash and completed a $10m placement of ordinary shares to institutional investors. Escrow.com provides secure online payments and online transaction management for consumers and businesses on the internet and reported FY14 revenue of US$5m and EBITDA of US$1.2m, equating the purchase price to a 1.5x trailing revenue multiple and a 6.25x trailing EBITDA multiple.

PHW Consolidated, which is poised to acquire Tomizone, has entered into partnership with STQRY. STQRY’s technology offers location aware customised content built on Tomizone’s wi-fi software platform.

Iron Mountain has agreed in principle to acquire Recall Holdings by the way of a recommended court approved Scheme of Arrangement for 0.1722 of an Iron Mountain common share for each Recall share or a $8.50 per share cash option (subject to a total cash pool available of $225m), with preference given to each Recall shareholder’s first 5,000 shares. The proposed purchase price represents a 13.0x trailing EBITDA multiple.

Brookfield Asset Management is believed to have partnered with Digital Bridge Holdings to bid for Crown Castle Australia, the Australian telecommunications tower owner.

Babjob Services, a Bangalore, India-based company that runs an internet job portal, has raised US$10m from SEEK, the Australian online employment marketplace, for an undisclosed minority stake.

Integrated Research has paid US$5m to buy IQ Services, the US-based unified communications testing company.

Legend Corporation has acquired selected assets of System Control Engineering for $17.9m. Legend will acquire SCE for $10.2m initially with the remaining $1m payable by December 31, 2015. The vendors will remain with the business and can achieve a total in deferred payments of up to $7.7m based on the EBIT results for FY16 through FY19.

TechnologyOne has acquired Digital Mapping Solutions for $12m in cash with a significant proportion of the purchase price payable upon the achievement of an earn-out. DMS’s software allows for the storage, retrieval and management of spatial data for local government, government and asset intensive organisations. 

Promesa has exercised its option to acquire Thredit and its subsidiaries. Thredit are the developers of the meta-social platform and unified social messaging app named Thred.

Wolseley Private Equity has sold Cartridge World in a deal valued between $10m and $20m. Wolseley purchased 80% of Cartridge World eight years ago.

Hansen Technologies has acquired TeleBilling A/S from DICO A/S and others for $30.2m in cash and stock. Hansen will raise $15m to partially repay debt used to fund the transaction. TeleBilling is a customer care and billing solutions provider.

SurfStich has acquired Magicseaweed and Stab Magazine for a total consideration of $13.8m and 4.8m shares in SurfStich. A fully underwritten institutional placement of ordinary shares to raise $37.5m has also been launched, with proceeds being used (in part) to fund the acquisitions.

Sydney start-up Airtasker has raised a further $6.5m in funding led by Shanghai-based Morning Crest Capital, the NRMA, and Australian venture capital firms Exto Partners, Carthona Capital and Black Sheep Capital. Morning Crest Capital has invested in a number of Australian start-ups including Pocketbook, GoCatch and SchoolPlaces.

ICT MOVES

Bevan Slattery’s Superloop Limited has lodged a prospectus to raise $17.5m through an IPO on the ASX. Prior to founding Superloop, Mr Slattery was also founder and CEO of NEXTDC Limited and co-founder and CEO of PIPE Networks, acquired by TPG Telecom in 2010.

In addition to Mr Slattery as executive chairman, the Superloop board includes CEO Daniel Abrahams (ex Aurizon and Energex) and NEDs Michael Malone (ex-iiNet), Greg Baynton (ex-PIPE Networks and NEXTDC) and Louise Bolger (telco and media lawyer). At the $1 offer price, Superloop will have a market cap of $90m.

Mitula, the Madrid-based digital classifieds business, has undertaken an $8m pre-IPO raising to fund a UK-based acquisition.

Nine Entertainment is on the verge of selling its Nine Live business to Affinity Equity Partners for around $640m. An agreement is thought to have been signed for the division, which includes the ticketing business, Ticketek. The price represents a multiple of around 16.0x EBIT.

Seven West Media’s $612m capital raising has positioned the business to pursue acquisitions, should opportunities arise.

Entropolis, a privately-held curated online marketplace, will begin seeking investors to take a minority equity stake in the start-up business in May, to help fund the platform’s global launch by year-end, said founding CEO Tania Price.

Brinks, the US-based security logistics business, and Armaguard, the security logistics business owned by Linfox, have been mentioned as potential bidders for Recall, the Australia-based document management business.

Envato, the privately held online marketplace for digital content, is considering self-funded plans to expand in non-English speaking markets, director of growth and revenue Ben Chan said.

Future Fibre Technologies, an Australian security technology company, will seek to raise $21m in its initial public offering at $0.70 per share.

Meanwhile goCatch, the Australia-based taxi booking app, has engaged advisors to sell the business and are expecting to secure an offer of around $20m.

Ten Network is believed to be considering a deal in which Foxtel would buy 14.9% of the business at $0.18 per share. Bruce Gordon has also offered to inject $70m to $100m into Ten in return for two board seats.

Oneflare, a privately held Australian online employment marketplace, is planning to revive its plans to raise capital in six months to fund expansion in Australia and to enter the UK, CEO and co-founder Marcus Lim said. The company is currently undertaking a soft launch in the UK and hopes to enter that market this calendar year.

Xero would only look to acquisitions to add functionalities to its existing IPO rather than acquiring customers, said Australian managing director Chris Rudd. It is also reaching significant milestones towards a likely 2016 IPO. 

Techniche, a Brisbane technology investment company, is actively looking for bolt-on targets for its UK-based field management software business Urgent Technology, as well as other strategic investments for the company.

Phoenix Business Consulting, an IT services provider for SAP systems and software, expects a cash sale in the US$10m range “within a year or two”, said founder and CEO Hanif Sarangi.

Seera, an Australian cloud talent management software and services company, is seeking to raise £2m-£3m via its UK-based holding company in August/September 2015, said chairman Stuart Cole.

GBST Holdings, an Australian financial services software company, will consider acquisitions to enter markets in line with its global growth aspirations, said CFO Patrick Salis.

Private equity and trade buyers are said to have expressed interest in rescuing NewSat by funding the completion of its Jabiru-1 satellite project or taking capacity on the satellite once it is launched into orbit. The remainder of NewSat’s Jabiru-1 project, which is 75% complete, will cost between US$150m-$200m.

AHAlife, a luxury online marketplace about to list on the ASX via a reverse takeover by listed vehicle INT Corporation, will consider acquiring complementary online marketplaces in the next six to 12 months.

Menulog, the Australian food home delivery service, is up for sale for up to $500m. The owners have not ruled out listing the business, but a trade sale is considered more likely and may sell at a multiple of 10x to 12x revenue.

China Unicom is in talks with Telstra over forming a joint venture (JV) to be engaged in internet of vehicles and related big data services.

Universal Communications Group, an Australia-owned telecommunications services company, could look at entering international markets before a possible mid-term trade sale, CEO and managing director Rafael Luna said.

121cast, Melbourne-based radio app creator, will be looking to hire a financial advisor and will pursue a capital raise in 12-18 months to grow the company, CEO and co-founder Edward Hooper said.

Reffind, the Australian referral-driven recruitment platform, is planning to conduct an ASX float valued at about $10m.

Silverhorse Technologies, a governance integration technology company, is in talks with two Australia-based targets regarding an acquisition and hopes to sign a deal by 4Q15, CEO Raymond Weeda said.

Industrie IT, the privately held Australian business consulting and investment firm, will review whether or not it will take external investors on-board in 12 months as it focuses on expanding in Asia, CEO Con Zeritis said.

Nearmap, an Australian aerial map technology company, is on the lookout for acquisitions of companies that can extend its core IP or with IP that can take it into related areas, said CEO Simon Crowther.

Maestrano, Australia-based technology and cloud-based services company, can entertain a $10m-plus capital raise in the next 12 months to fund its international growth, co-founder and CEO Stephane Ibos said.

Webqem, the privately held IT services company, is considering acquisitions and partnership strategies, including joint ventures, as options to increase in size, owner and COO Larry Adler said.

M&A specialist teams at InterFinancial compile market intelligence from their own private sources and from the Australian Securities Exchange (ASX), mergermarket.com and various other public information sources. Forecasts are consensus forecasts sourced from S&P Capital IQ.

www.interfinancial.com.au

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THE Motor Traders Association of Australia’s $8.5 billion dollar superannuation fund, MTAA Super, has won the prestigious Fund of the Year-Medium award at the Conexus Financial Superannuation Awards – and in the same week announced its fourth female director.

It is a massive turnaround for the fund that was heavily hit by the global financial crisis, but has stuck to its guns on astute restructuring – including a drive for more involvement for women in its executive teams and board – to produce a strong financial and cultural outcome in just four years. 

At the black tie awards ceremony in Sydney’s Ivy Ballroom, chief executive officer Leeanne Turner said it was a great honour to receive the award and paid tribute to the staff and the fund’s board of directors.

“This award means a great deal to us,” Ms Turner said. “It recognises the hard work and dedication of a passionate team, who have committed to putting the wellbeing of our 260,000 members first.”

MTAA Super chairman, John Brumby said, “It’s been quite a journey for MTAA. When I became chair four years ago we had come through a big dip post-GFC and we needed to make a lot of changes.

“We restructured the strategic asset allocation, management of the organisation and introduced a new board governance model, composed of equal representation from employers, employees and independents. The new board structure received much attention within the industry as a best practice example of board diversity and independence.”

MTAA Super also announced the appointment of Rhonda O’Donnell as its fourth female representative director.

With Ms O’Donnell’s appointment, Mr Brumby said MTAA Super is further driving gender diversity in the boardroom, achieving 44 percent female representation in the largely male dominated finance and super industry.

He quoted the government’s Workplace Gender Equality Agency’s most recent data, which showed only 19.4 percent of board member positions in the finance and insurance services sector were held by women. He said the Australian Institute of Company Directors (AICD) reported that just 20.4 percent of ASX 200 boards are comprised of women.

Mr Brumby said Ms O’Donnell has an impressive background as a successful executive and board member in both the private and public sectors. She has a background of extensive experience in international and local industries including telecommunications, information technology, education, government and utilities.

Ms Turner said she was proud of the achievements MTAA Super had made in recent years, proving its resilience during a time of rapid change in both the superannuation as well as motor trades industries where a large portion of its membership is based.

The awards were created by Conexus Financial, publisher of Investment Magazine, to encourage superannuation funds to raise the bar in all aspects of their operations for the benefit of all super members and consumers.

www.mtaasuper.com.au

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CENTENARY Landscaping Supplies, known to most residents of Brisbane’s western suburbs for their fleet of delivery trucks, has a new chief executive.

The family business success story sees Conor O’Shea succeeding his father Terry O’Shea, who moves into the active role of managing director. 

Conor O’Shea has worked in most roles in the company, beginning at the age of 14 serving as yard hand on weekends. He then went on to serve for two or more years as a yardmen, driver and salesperson while he studied sound engineering, visual art and gained valuable sales experience working with other organisations.

He returned to Centenary Landscaping Supplies in 2013, as business development manager then sales manager, with the objective of improving systems, business intelligence, information technology, staff training and team building.

Terry O’Shea, who founded the business with his wife Denise in 1985, said the timing of the handover was obvious.

“We are growing to become the Centenary Group of companies, and with Conor as MD for Centenary Truckers and the new Centenary Outlet it was clear he was the best person to lead Centenary Landscaping Supplies,” he said.

Conor, who is now also responsible for strategic planning, sales management and system implementation across the group said, “It is important to me that we realise our growth opportunities while continuing to ensure the highest value services and offerings are available to our customers.

“I will continue to work with Terry to uphold the values of the family business while we grow into new markets and distribution channels.”   

Conor’s steep climb to the top job was supported by Jacob Aldridge from Shirlaws business coaching, who said the transition was neither straightforward nor guaranteed.

“Conor brought insight from years working across all areas of the business, and a next generation eagerness to break new ground. But he still had to demonstrate his capability to the Centenary team, customers and suppliers,” Mr Aldridge said.

“I've been privileged to build strategy with hundreds of business owners, and I recently spoke with Terry to communicate two things: how few aspiring business owners achieve the business success he has realised; and how proud he and Denise deserve to be of the men their two sons Conor and Kelby have become.”  

Centenary Landscaping Supplies has a seven acre yard on their Sumners Road, Darra site near Brisbane, and offer customers an online ‘Click & Collect’ service in addition to delivery solutions.

www.centenarylandscaping.com.au

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TOMTOM, the global positioning system (GPS) mapping provider, has bought Location Navigation from Australia’s Sensis, including the WhereIs map assets.

TomTom reported it would acquire all business activities of Location Navigation including its mapping intellectual property (IP) and customer database. 

“With this acquisition, we further strengthen our global map offering for automotive and licensing customers,” TomTom Maps managing director Charles Cautley said.

“TomTom will build on Location Navigation’s already high quality, richly attributed maps of Australia to deliver real-time maps that will enable Highly Automated Driving and Internet of Things applications for our customers.”

Mr Cautley said TomTom would fully integrate the Australian map database into its transaction-based mapmaking platform to enable real-time maps. Financial details of the transaction with Sensis, originally developed from Tesltra’s Yellow Pages and White Pages publishing assets, were not disclosed. Telstra sold Sensis to US private equity firm Platinum Equity in early 2014.

No financial details of the TomTom-Sensis deal will be disclosed.

TomTom has built its operation as a global leader in automotive navigation and mapping products. TomTom now also creates GPS Sport Watches, as well as fleet management solutions.

Founded in 1991 and headquartered in Amsterdam, TomTom has 4,000 employees worldwide and sells its products in 46 countries.

www.tomtom.com

www.sensis.com.au

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