IT takeovers move ranking

ASG Group’s takeover negotiations with potential suitors mark a trend of merger and acquisition activity in Western Australia’s IT and communications sector.

Three deals have taken place among the sector’s 10 largest companies in WA during the past year, with ASG in position to become the fourth should negotiations result in a takeover.

NEC Australia started the acquisition activity in July with its purchase of Perth-based CSG’s technology solutions business. 

The agreement, worth $227 million, grew NEC’s WA staff numbers from 40 to 166 and positioned it as the state’s ninth largest IT company, according to WA Business News’ 2013 Book of Lists.

The acquisition was part of a new business strategy for NEC to increase its service offerings, adding IT services to its existing telephony and communications businesses. Meanwhile, CSG has narrowed its provisions to office equipment, telephony and printing services.

Empired’s acquisition of smaller IT firm Conducive followed in July, with the latter becoming part of Empired’s consultancy division – still led by Conducive founder Branden Dekenah.

The takeover of Conducive, at a cost of about $8 million, helped Empired increase its revenue by about 9 per cent to $25 million over the first half of the 2013 financial year.

Empired is now the fifth largest IT company in the state, based on its staff of 250.

The state’s third largest IT services provider, Ajilon (coming in behind CSC Australia and Kinetic IT in first and second respectively), has also grown through a merger.

Ajilon has diversified by adding IT-specific recruitment services to its business portfolio by merging with recruitment firm Icon. Human resources specialist Adecco owns both businesses, which explains its move into recruitment.

The above deals followed Amcom – the seventh largest company on the list – in its acquisition of L7 Solutions for $15 million in November 2011.

While not amid the largest players in the IT and communications sector, Coventry Group-owned Managed System Services (MSS) has also taken advantage of buying out a smaller player to bolster its capability.

MSS was founded after key IT staff were brought in to work on the implementation of computer system Oracle in Coventry Group.

It has since grown and acquired Multipro IT in February. The acquisition added 21 staff to MSS’s team of about 25, so it now ranks at the state’s 27th largest company working in the IT space.