Perth-headquartered ComputerCORP has today announced an agreement to buy a Victorian-based IT company for over $2 million in cash and scrip.
Perth-headquartered ComputerCORP has today announced an agreement to buy a Victorian-based IT company for over $2 million in cash and scrip.
In a statement this afternoon, ComputerCORP said it will acquire the business as a going concern, including certain net assets, of Paragon IT and Paragon Systems, subject to the fulfillment of certain conditions.
ComputerCORP will pay $1.6 million in cash and issue $500,000 worth of shares to buy Paragon IT and Paragon Systems.
Paragon employs 10 sales people and 20 technical specialists and engineers, which will increase ComputerCORP's billable engineers by over 25 per cent, allowing it to increase its services revenue.
On completion of the transaction, Bill Votsaris, found of Paragon, will be appointed ot the ComputerCORP's board.
Below is the statement:
ComputerCORP Limited (ComputerCORP) has signed an Agreement, subject to the fulfillment of certain conditions precedent, whereby it has agreed to acquire the business as a going concern, including certain net assets, of Victorian based Paragon IT and Paragon Systems (Paragon).
The Paragon business
In 1988, Mr Bill Votsaris established Paragon, recognising the growing market need for interconnectivity solutions to allow computers and peripherals from multiple vendors to connect. Over time the business evolved, adding new offerings and professional services and today operates as a specialist SME Technology Company with customers throughout Victoria and currently employing 50 staff.
Paragon has a strong and long history in the Victorian information technology sector. The business focus has been to provide products and services to Victorian Education and the business community seeking value and performance. Over the 20 years Paragon has built and maintained significant vendor partnerships enhancing the consistency and value delivered to its customers. Key vendor partnerships include IBM, Lenovo, Cisco and Microsoft.
The Paragon team is comprised predominantly of technical people with broad certifications including unified communications and "TAP" Microsoft's technical adoption program, one of only 80 in the world.
Rationale
ComputerCORP is a national organisation with offices throughout Australia. For the year ended 30 June 2008, ComputerCORP recorded revenues of $151 million and employs approximately 220 personnel. ComputerCORP's head office is based in Western Australia, with Western Australia accounting for approximately 40% of its revenue.
ComputerCORP has been evaluating a number of opportunities to increase its size and achieve critical mass, specifically on the East Coast. Earlier in the year ComputerCORP concluded the purchase of Coretech in Brisbane, successfully expanding its presence in Queensland by approximately 50 people. The acquisition of Paragon furthers the Company's strategy by significantly strengthening the Company's presence in Victoria, the second largest market in the country.
Paragon employs approximately 10 Sales and 20 qualified Technical Specialists and Network Support Engineers, which when combined with ComputerCORP's resources in Victoria, gives the company significant sales, technical and engineering capability with a solid platform from which to grow. The addition of the 20 engineering staff increases ComputerCORP's billable engineers by over 25%, allowing it to increase its services revenue.
In addition, ComputerCORP historically has had limited exposure to the Education sector. Through the acquisition of Coretech, the company's exposure to education increased significantly and the acquisition of Paragon further increases ComputerCORP's presence in the Education sector.
Proposed Consideration
The purchase price will be in the order of $2.1 million and will be payable, subject to conditions precedent being fulfilled, as follows:
- $1.6m cash payment payable in tranches with the final payment due 4 May 2009; and
- $0.5m in shares through the issue of 11.7m ComputerCORP shares at an issue price of 4 cents per share.
The Agreement is subject to and conditional on, inter alia:
- the completion of a due diligence investigation to the satisfaction of ComputerCORP; and
- the approval of the Board of Directors of ComputerCORP.
Appointment to the Board of Directors of ComputerCORP
On conclusion of the transaction, Mr. Bill Votsaris (the founder and majority shareholder of Paragon) will be appointed to the Board of ComputerCORP.
Mr. Votsaris has a professional history of more than 25 years in technology and services related businesses, both as a successful technologist in major international corporations and as an entrepreneur and commercial manager.
Mr. Votsaris started his professional career as a qualified electronics engineer, first working with Alcatel. Bill was quickly identified as a candidate for accelerated development and was relocated to Silicon Valley. After 7 years with the company, Mr. Votsaris accepted a position with Hewlett Packard in Australia.
In 1988, Mr Votsaris established Paragon, a specialist SME technology company with 50 employees and clients throughout Victoria. During 2003 Mr. Votsaris acquired an equity interest in SynergyPlus, then a $15m per annum, loss-making business with a focus on legacy RPG technology and IBM hardware reselling. Under Mr Votsaris's guidance, the company grew in three years to a profitable $40m per annum business offering the very latest in java development services and an increased range of IBM solutions.
In May 2007, Synergy was acquired by Hyro Limited. Mr. Votsaris joined the company in the role of Chief Operating Officer with a specific focus on the ongoing management of the Synergy business and the management of integration of the business and systems of the merged group. Mr. Votsaris was appointed the Chief Executive Officer and an Executive Director of Hyro in February 2008.
Conclusion
The Board of Directors of ComputerCORP believes the acquisition of Paragon is in line with its strategy of achieving critical mass on the East Coast, increasing its services capabilities, and its vertical exposure to the Education sector, and further believes it will have a positive financial impact on the Company. The appointment of Mr. Votsaris strengthens the ICT industry knowledge of the Board.
