The Domenic Martino-chaired ComputerCORP Ltd has announced plans to merge with Melbourne-based IT company Leading Solutions, in a deal that will double the size of the West Perth-based business.
Leading Solutions founder Frank Colli will become chief executive of the merged company, which aims to generate annual revenue in excess of $300 million.
The deal represents a major step in Mr Martino's plan to lift the performance of ComputerCORP, which completed a backdoor listing on the stockmarket last year after being in private hands for 18 years.
The company has underperformed since then, posting a trading loss of $3.1 million and a bottom-line loss of $17.8 million for the year to June 2007, including a $13.9 million goodwill write-down.
ComputerCORP currently generates annual sales of $144.9 million (about 40 per cent in WA) and has 200 staff, while Leading Solutions has sales of $135 million on the east coast and 190 staff.
ComputerCORP will pay $500,000 in cash and issue 177.1 million shares (at a maximum of 17 cents per share) to Mr Colli, valuing the deal at $30.1 million. Mr Colli will also receive a plus a series of performance shares and options.
Mr Martino recently underwrote a $5 million convertible note issue by ComputerCORP, and Mr Colli has agred to subscribe for a further $2.3 million of convertible notes on the same terms.
