Canberra's Citadel acquires HPE gold partner for $17.5m

Canberra IT provider Citadel has entered into a binding agreement to acquire Hewlett Packard Enterprise gold partner Kapish for $17.5 million.

Melbourne-headquarted Kapish is a software and services company. It is one of only two Australian gold business partners for HPE TRIM records manager suite of document and records management solutions, along with Optus.

Citadel chairman Kevin McCann expected the acquisition to add $4 million of EBITDA to the company's 2017 financial year. "Going forward, Citadel will continue to explore acquisitions where appropriate to support its known organic growth opportunities."

The initial payment of approximately $12.25 million will be made upon financial close of the acquisition, expected before 30 June. This payment will be funded from available cash. Two following payments will be made during the subsequent two years totalling up to $5.25 million.

With the acquisition, Citadel can target new markets and clients with cloud and software-as-a-service.

Kapish has approximately 180 clients across local and state government agencies, according to Citadel. Kapish's founders agreed to stay on in the business.

Darren Stanley, Citadel's chief operating officer and deputy chief executive, said: "Kapish is a natural augmentation to Citadel's existing knowledge management capabilities and significantly expands our market share in local and state governments. Additionally, the acquisition of Kapish is immediately EPS [earning per share] pre-synergies and increases Citadel's proportion of recurring revenue contracts."

The Canberra IT provider listed on the Australian Securities Exchange in 2014. Citadel turned over $73 million for the 2015 financial year.

Citadel recently expanded its health managed service offerings with acquisition of PJA Solutions – a managed technology services provider to the health sector – for up to $60 million.

With offices in Canberra, Melbourne, Brisbane and Adelaide, Citadel employes more than 200 employees and delivers services through its subsidiaries including Frontier Group, ServicePoint and Jakeman Business Solutions.