In a deal that will create the biggest independent IT services provider in Australia, technical services company UXC will snap up the Australian arm of work services firm Getronics.
The Getronics Australia deal, to be finalised on 29 February, is the largest acquisition UXC has ever undertaken and is intended to boost UXC's professional and communications services as well as adding UXC new managed workspace services to its offerings.
"We can look for bigger contracts with more breadth," UXC finance director Mark Hubbard told ZDNet.com.au.
Getronics' client base was a strong trigger for the acquisition, according to Hubbard: "They have long term multi-year service agreements," he said. Some of Getronics clients include the RTA, Queensland Health, Optus, Medibank, Tabcorp, the Department of Defence and Energy Australia.
Cross selling between customers will also benefit UXC according to Hubbard. "We're playing the big end of the market," he said, servicing the ASX top 50 companies and the government. "Even if [cross-selling] was just 10 percent it would make a big difference," he continued.
"We also get a partnership with the parent company," he continued, where Getronics Australia will have the opportunity to sell to the ANZ operations of future multi-national customers.
The acquisition could see revenues for UXC's business solution division rise by 45 percent according to Hubbard. The margins of the division will also grow, through focusing on communications services rather than managed services, he continued.
Getronics Australia will operate as a business unit within UXC, Hubbard said. "Their team and culture will remain intact," he added. "To [recruit the same number of staff] in the current market would be enormously expensive and time consuming," Hubbard said.
Although Gentronics Australia has recorded losses in the past, Hubbard said the unit makes money. "I know they published losses in the statutory accounts, but that is because of charges from the parent company," he said. "Strip away those charges and they are profitable," he continued.
Getronics has a long history in Australia, with the company first raising its head in 1972 as Wang Australia, before being purchased by Getronics NV in 1999, which was in turn acquired by Dutch telecommunications company KPN. The Dutch telco decided to focus on its core markets, selling Getronics Australia to UXC.
The offer is all cash, and is based on a multiple of current earnings according to UXC. No figure on the deal was disclosed.