ComputerCORP Ltd today announced an agreement to purchase Queensland IT firm Coretech for up to $4.2 million in staged cash and share payments over two years.
ComputerCORP Ltd today announced an agreement to purchase Queensland IT firm Coretech for up to $4.2 million in staged cash and share payments over two years.
The Coretech deal comes two weeks after the Domenic Martino-chaired ComputerCORP said it had terminated an agreement to buy Melbourne-based IT firm Leading Solution for more than $28 million.
Coretech generates annual sales of $30 milion while ComputerCORP has annual sales of $143 million.
A ComputerCORP statement is pasted below:
ComputerCORP Limited has signed a Share Sale Agreement, subject to the fulfilment of certain conditions precedent, whereby it has agreed to acquire Brisbane based Coretech.
Coretech is one of Queensland's largest ICT solution providers to the Corporate, Government and Education sectors.
Established in 1991, Coretech has grown to a team of over 50 staff and supports its customers throughout Queensland from its operations in Brisbane, Maroochydore, Toowoomba and the Gold Coast.
Coretech have a direct relationship with Lenovo and have developed strong relationships with vendors such as IBM, VMWare, Netapp, Toshiba, 3Com and Microsoft.
The company has a strong engineering and integration capability and has recently been appointed as a VMWare Enterprise Partner.
Coretech is one of four successful panel members supplying to the Education Queensland Preferred Supplier Arrangement awarded in September 2006.
In August 2007 the company won the contract to supply 8000 notebooks to Queensland school teachers as part of the Department of Education and Training "Computers for Teachers" initiative.
Through its specialist Education services division, Coretech has developed a School Network Management Solution (Corebuild) which is a best practice Microsoft network for Schools.
The solution was designed specifically for the education market and integrates data management with school curriculum needs.
Rationale:
ComputerCORP is a national organisation with offices throughout Australia.
For the year ended 30 June 2007, ComputerCORP recorded revenues of $143 million and employs approximately 180 full time personnel.
ComputerCORP is headquartered 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.
Coretech, which is based in Brisbane, is expected to record revenues in the financial year to June 2008 of $30
million and profit before tax of $0.8 million.
The acquisition of Coretech fits with this strategy and enables ComputerCORP to have a significant operation in Queensland.
The owners and senior management team of Coretech, Mr Garry Holmes (CEO), Mr David Wain (Sales Director) and Mr Stuart Rose (Operations Director) will continue with Coretech and have signed service agreements with ComputerCORP for a two year period to June 2010.
Their responsibility will be the combined Coretech and ComputerCORP Queensland operations with a view to increasing the combined Queensland operations through organic growth and further selective acquisitions.
Proposed Consideration:
The purchase price will be in the order of $2.4 million and will be payable, subject to the conditions precedent being fulfilled, over a two year period depending on profit performance of the combined operations.
The purchase price will be a combination of cash and the issue of ComputerCORP shares at an issue price of 20 cents per share as follows :
- $0,6m cash payment; and
- 3,5m shares; and
- Subject to performance criteria to be met between June 2008 and June 2010, a
- maximum number of a further 6,0m shares may be issued at 20 cents per share.
- The Share Sale Agreement is subject to and conditional upon, inter alia:
- the completion of a due diligence investigation to the satisfaction of ComputerCORP;
- the approval of the Board of Directors of ComputerCORP; and
- any other regulatory approvals, as required.
The Board of Directors of ComputerCORP believes that the acquisition of Coretech is in line with its strategy of achieving critical mass on the East Coast and believes it will have a positive financial impact on the Company.
