Two weeks after listing on the Australian Securities Exchange, Empired Ltd has acquired fellow Western Australian IT services company Quadrant Group for more than $1.7 million in cash plus 300,000 share options.
Two weeks after listing on the Australian Securities Exchange, Empired Ltd has acquired fellow Western Australian IT services company Quadrant Group for more than $1.7 million in cash plus 300,000 share options.
An Empired announcement is pasted below:
Empired acquires Quadrant Group
Newly listed Western Australian based IT Services Company Empired Limited has acquired fellow Western Australian IT consulting services provider Quadrant Group for A$1.74M cash plus 300,000 options.
The acquisition will be earnings accretive from 1 November 2007 and will increase Empired's current
internally budgeted earnings by approximately 35%.
Quadrant Group is a leading information management and consulting business specialising in the provision of IT Planning & Strategy, Business Analysis, Project Management, Change Management and Business Continuity Management.
Under the terms of the transaction Empired, which listed on the ASX on 19 October 2007, will pay A$1.74M to the current owners of Quadrant and issue them with 300,000 unlisted Options (excisable at A$0.40 by 1 November 2010).
The cash consideration will be paid over a twelve-month period, with 65 per cent of the purchase payable on settlement (approximately 31 Oct 2007), 20 per cent payable six months following settlement and the remainder paid 12 months after settlement. The unlisted Options will be paid on settlement.
Funded from the existing balance sheet, Empired views this acquisition as one which will immediately add to the revenue and EBIT of the business, without diluting the current share capital of the company.
The transaction has been calculated at slightly less than a multiple of 3 times forecast FY08 EBIT.
Quadrant Group is forecasting that the business will generate revenue of $3.37 Million and EBIT of $636, 000 in the 2008 financial year. Unaudited revenue of $2.74 Million and EBIT of $462,853 was generated in the 2007 financial year.
Commenting on the transaction Empired Managing Director Russell Baskerville said: "This acquisition marks a key milestone toward achieving Empired's stated growth strategy. It will significantly improve Empired's breadth of service offerings and number of large tier 1 customers. This will result in increased earnings and growth opportunities for the 2008 financial year".
Quadrant will be integrated into the Empired business model introducing new service offerings to form Empired's "Enterprise Strategy and Architecture" division as outlined to the market as a key growth area for Empired, it will also substantially enhance Empired's capability in "Programme and Project Management" services.
"This acquisition delivers against Empired's stated objectives within its prospectus of increasing service offerings and accelerating the execution of its strategy through acquisitions. It is to be noted that use of funds outlined in Empired's prospectus relating to 'Service Line Development' will be redirected toward the purchase consideration for this acquisition," Mr Baskerville said.
It is envisaged that synergies with overheads, back office functions and client cross sell synergies will be realised over time as a result of the Quadrant Acquisition.
Quadrant's existing client base is predominately large Western Australian Government organisations and a number of large corporate organisations. As a result, Empired's existing client base will be well complemented by that of Quadrant's.
In addition to expanding Empired's customers, Quadrant Group will provide a strong introduction to the Western Australian government sector which Empired currently does not service.
Quadrant Group will add approximately 28 employees to Empired, increasing Empired's staff numbers to approximately 125 employees post transaction.
The vendors have all agreed to two year employment service agreements with Empired, with Quadrant Group Managing Partner, Glenn Hocking being appointed to the role of National Practice Manager, continuing to drive the services Quadrant brings to Empired.
The transaction is subject to certain conditions being satisfied including transition of key staff.
