Dimension Data Australia has offered AU$1.90 a share to purchase enterprise IT consultancy company Oakton, in a cash deal that values Oakton at AU$171 million.
The price offered by Dimension Data represents a 30 percent premium on Oakton's closing share price on the ASX yesterday, and a 43 percent premium on Oakton's 3 month volume weighted average share price.
Oakton's board has unanimously recommended the offer to the company's shareholders, and said in a statement that the board will vote all Oakton shares held by them in favour of the proposal. Oakton founder and executeive chairman, Paul Holyoake, along with current CEO, Neil Wilson, hold between them 11.3 percent of the company.
Last year, the two companies struck up a partnership to offer services beyond IT implementations to enterprise and government customers.
"While we remain very positive on the outlook for Oakton as an independent company," said Holyoake. "Given that the proposal put forward by Dimension Data represents an attractive premium for Oakton shares, it is the unanimous recommendation of the board that shareholders cote in favour of the scheme."
"The investments we have made in our operation in India, solution development and service integration partnerships have created a unique platform that is increasingly well aligned with our cusomers' requirements," he said. "This has been recognised by our strategic partners at Dimension Data."
"Dimension Data and Oakton have a complementary value proposition and footprint, and a strong cultural fit," said Dimension Data Australia CEO, Rodd Cunico. "The proposed acquisition will expand Dimension Data’s presence in Australia significantly."
"With stronger strategic IT consulting capabilities and our proven technology expertise, we’ll be able to provide the type of end-to-end solutions our clients are seeking. This is an exciting opportunity for Dimension Data, and one that I believe will position us as one of the leading IT solutions and services providers in Australia."
It is expected that a shareholder meeting to approve the deal be will held in November. If shareholder approval is obtained, the offer will still need to be approved the Victorian Supreme Court.
Oakton's August 11 share price of AU$1.47 is up on its five year low of AU$1.05 in June 2012, but less than half of its AU$3.90 high posted in November 2009.
Oakton has over 1,100 employees, with offices in Melbourne, Sydney, Canberra, Perth, Brisbane, and Hyderabad.
Last year, Oakton recorded a net profit of AU$9.16 million, down 23 percent on its 2012 numbers.
In 2013, Oakton also partnered with Australian IT services company Empired to land a two-year contract with ongoing annual options to provide Barrick Gold APAC's accountancy operations with a fully managed Oracle-based solution.
Dimension Data Australia is a wholly owned subsidiary of Dimension Data Holdings, which itself is a wholly owned subsidiary of Japanese telco giant NTT.