CloudCentral reverse takeover deal axed by Dromana Estate

CloudCentral’s hopes of listing on the Australian Stock Exchange through a reverse takeover of Dromana Estate have been dashed, with the publicly-listed vineyard ownership company today announcing it had terminated the agreement.
Written by Leon Spencer, Contributor

Dromana Estate today told its shareholders that it had terminated an agreement it had reached with CloudCentral, which would have seen the publicly-listed company wholly acquire the Canberra-based cloud company, effectively allowing it to list on the Australian Stock Exchange (ASX).

"Dromana Estate Ltd...confirms that it has terminated its agreement to acquire Cloud Central effective immediately. Dromana would like to wish Cloud Central the best with its endeavours to continue to grow its business," Dromana Estate told its shareholders today in a statement (PDF).

"Dromana is presently reviewing a number of potential transactions and will inform the market as required on any progress with these initiatives," it said.

The deal between the Canberra-based cloud computing infrastructure and service provider and Dromana Estate had been in the works for months, with the agreement for the acquisition first being tabled with public investors in March.

In early April, Dromana Estate announced it had completed its due diligence of CloudCentral, and at the end of April, it announced that Melbourne-based technology investment group, Dominet Digital, would "cornerstone" its acquisition of CloudCentral.

Dominet is headed by Domenic Carosa, co-founder of the internet-focused pooled development fund, Future Capital Development Fund, invests in companies from a range of technology-related industries, including BlueChilli, DriveMyCarRentals.com.au, and SMS Central.

At the time, Carosa said: "CloudCentral meets all of our investment criteria as a scalable incvestment opportunity operating in a rapidly growing market. I’m glad that we have come to terms on our participation."

"As well as providing funding, we look forward to partnering CloudCentral on its expansion by adding strategic input, relationships and operational support," he said.

It was at this time that Dromana Estate told shareholders that it had "withdrawn its invitation" to former iiNet director, Andrew Milne, to come on board as a non-executive director for the proposed new entity.

"Dromana wishes Mr Milner well in his future endeavours," said the company.

Then, on Tuesday, Dromana Estate was placed in a trading halt, and on Thursday was suspended from quotation, pending today's announcement.

Although this may be seen as a blow for CloudCentral, which is headquartered in the NICTA building in Canberra, and has four cloud data presences located within Australian, the company has made other inroads since first announcing its now-defunct agreement with Dromana Estate.

On 15 April, it was made public that CloudCentral had signed a binding heads of agreement to acquire the intellectual property of Californian software company, DEY Storage Systems.

At the time, CloudCentral's founder and CEO, Kristoffer Sheather, said the agreement with DEY Storage Systems would introduce Software Defined Storage services to CloudCentral partners and develop new opportunities for the Australian cloud provider.

DEY Storage Systems raised US$3 million of funding in 2012 to develop pioneering data center storage management software. The software enables large data centre customers to buy high performance storage at lower costs than using traditional storage vendors.

"We see this as a transformational deal from both a technology and investment perspective. The addition of Software Defined Storage services eliminates the need to pay third parties for storage and gives us more control over the future development of our platform," said Sheather in April.

"Expanding into the private cloud creates a completely new offering for us, while reducing costs for our public cloud customers as we don’t need to pay the big vendors' really high storage costs," he said. "We would be the first Australian cloud provider to own their entire stack from end to end, and doing it in a completely unique way."

Just a day prior to CloudCentral's DEY Storage Systems announcement, the company revealed it had expanded its partner network with new signings including with Infinite Networks, OOKI, and Simple ID.

"This is the year we are experiencing rapid expansion from the early adopter stage to customers now moving specific workloads to the cloud and leveraging the cloud model for backup and disaster recovery," said Sheather, at the time.

CloudCentral's move to list on the ASX via a reverse takeover was only one in a series of such manoeuvres made by Australian IT companies over the past several months.

In October last year, Bulletproof announced that it was conducting a reverse takeover of Spencer Resources Limited.

Just last week, international pre-paid travel sim provider AussieSim began trading on the ASX as ZipTel after completing the reverse takeover of sports merchandise company, Skywards.

Meanwhile, Australian software security startup, Cocoon Data, is readying to list on the ASX as Covata Limited by September this year, after entering a AU$57 million binding agreement to merge with mining company, Prime Minerals.

At the time of writing, neither CloudCentral nor Dromana Estate had responded to ZDNet's queries. 

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