Australian telecommunications company, Inabox Group (ASX:IAB), has purchased the business of IT and Cloud services provider, Anittel Group Limited (ASX:AYG), for about $9.88 million in cash and shares.
The Anittel brand will be retained and operate as a subsidiary. Anittel shareholders will be issued Inabox shares in proportion to their existing holding. The initial cash consideration of $500,000 will be funded from Inabox’s existing cash resources. A further $1.5m may also be payable subject to Anittel’s performance in the second half of fiscal 2015. Inabox will also assume about $4.6m in lease liabilities related to its Cisco Hosted Collaboration Solution (HCS) rollout.
Inabox managing director, Damian Kay, told ARN he pursued Anittel to broaden Inabox’s revenue base. The agreement turns the parent into an $82m plus business.
“We’ve got enablement in the consumer space, we’ve got indirect channel in the SME space, and we were looking to broaden into corporate, government, and larger SME. We knew we needed a direct model to do that, and having an IT services business was the way to go.”
“They’ve got one of the few Cisco HCS platforms in the country and that gives us a play in the corporate and government space which we would never have had. There are only about four active in country and Cisco won’t deploy more; that’s a massive opportunity for us, especially when you’ve got the Tasmanian Government as a cornerstone deal.”
Anittel won a two-year Cloud contract with the Tasmanian Government in September 2013 to provide infrastructure-as-a-service (IaaS).
Kay also said that this deal opens the opportunity for broader acquisitions in the IT space; Inabox was previously limited to the wholesale telecommunications industry.
Additionally, it adds another layer of organic growth. Kay claims “building multiple channels to market is the key driver in this [acquisition]. We can’t keep acquiring; we’ve got to make sure we have the right channel through enablement, indirect, and now direct.”
Peter Kazacos, who served as managing director and executive chairman of Anittel until this acquisition, will leave the company and act as a external consultant to Kay.
As part of the role, he will oversee the continuation of Anittel’s HCS rollout and growth, and ensure integration goes well.
Kazacos told ARN the decision to sell was about finding scale.
“We got rid of our telecommunications component, Anittel Communications, because we believed it was sub-scale,” he said.
“In discussions I’ve had with Damien, I felt the merging of the two is the best for both of us. It creates one set of board costs, one set of listing costs, and there’s no overlap – he has a wholesale model, and the direct model will be Anittel.
“The other important thing is that he understands the opportunities of HCS. He has a dealer network of over 300, and we need that to progress our HCS offering.”
Inabox will inherit Anittel’s 135 staff, although Kazacos revealed that “very few people are going to be made redundant.”
Full integration is expected to be complete by June 30, 2015.
This purchase adds to Inabox’s acquisitions of iVox in July 2013 and Neural Networks Data Services on June 30 this year.