Datacom, NetOptions merge for further growth

Sydney IT services specialist Datacom has merged with Brisbane service provider NetOptions in a mutually beneficial arrangement that will see both companies primed for expansion.

Richard McAlary, chief executive at NetOptions, said the deal was unusual in that both parties were batting from a position of genuine strength.

Many "mergers" were effectively takeovers by one party of a weaker, financially troubled or even failing company, he noted.

Their established operations were complementary -- with little overlap -- so it made sense for them to join forces to expand nationally, he said.

"We are two strong and fast-growing IT companies and that's the difference. We both bring very strong balance sheets," McAlary said.

Michael Browne, chief executive at Datacom, said no real rationalisation of the businesses was expected as a result of the merger. "We've not identified any areas of duplication that would result in cost savings," he said.

Browne said the companies were working out where their best practices lay. "For example, Datacom's current service delivery relies heavily on ITIL," he said. "That's something that NetOptions hasn't done. Similarly, NetOptions has far slicker procurement practices."

The companies also complemented each other by region. Datacom would take NetOptions' strengths to its well-developed customer base in New South Wales and Victoria, while NetOptions would take Datacom's abilities to its Queensland clientele, Browne said.

NetOptions was a big Citrix partner, while Datacom was a strong Microsoft partner, McAlary said.

Together, the companies would have annual revenue of around $120 million and a staff of 760 -- including 130 professional IT services staff in Kuala Lumpur. NetOptions originally had 50 staff, according to a statement released by the companies.

Both brands would continue, but NetOptions technically became a subsidiary of Datacom by the deal, McAlary said.

"NetOptions will be referred to as a 'Datacom systems company'," Browne said.

The merger would also help Datacom win more government and education business. NetOptions had some 500 clients, many of which hailed from government or education, he said.

"People are looking for agile local companies," Browne said. "Our growth at Datacom has been very much a product of that. And this is just another step in the process."