Software developer and services provider Midware has bought out Sydney infrastructure support rival SynergyIT for about $700,000 - including payment of $373,000 in debt.
ASX-listed Midware will issue $300,000 in shares, $27,000 in cash and pay off $373,000 over two years to Synergy owners Denis Bignold and associated entities, the company said in an ASX statement.
Mark Flack, CEO at Midware, said buying the outsourcing and managed networking provider would stimulate growth, which was expected to hinge upon disaster recovery and multi-location IT support.
'Our growth strategy requires continued investment in our technology platform to ensure reliability and scaleability,' Flack said. Midware said that a management review had revealed that it needed to develop a more scaleable platform but did not have the skills in-house.
'After this review, the opportunity for Midware to acquire a business with the necessary skills and “outsource” to this now-controlled entity arose,' it said.
Midware said that Bignold -- who had extensive experience expected to prove valuable -- would stay on as a SynergyIT director and Midware consultant.
SynergyIT also had its own data centre and customer support group -- something Midware believed would complement its own offerings, the company said.
The SynergyIT business would continue to operate separately and was expected to generate 'positive returns' from existing and new clients.
'Revenues for the 2003-04 [financial year] are forecast to be $1.8 million with positive EBITDA greater than 10 percent. Combined with expected cost savings through efficiency improvements, a 20 percent-plus ROI is anticipated in the first full year,' Midware said.
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