Melbourne IT sinks AU$21.7m into Outware Mobile acquisition

The domain registrar has announced an investment in and two-year plan to wholly own software development company Outware Mobile by 2017.

For a price of AU$21.7 million, Melbourne IT has picked up a 50.2 percent share in Victoria-based software development company Outware Mobile.

In a conference call held on Wednesday morning, Melbourne IT managing director and chief executive officer Martin Mercer has labelled the 100 percent debt-funded acquisition a "cracker of a deal".

"It's really great to be able to make a really material announcement in relation to enterprise; we're delighted that the team at Outware Mobile has chosen to join with Melbourne IT," the CEO said.

"Together, we become the leading software-enabled cloud solutions provider in Australia."

With Outware Mobile expected to generate revenue of AU$15.6 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$5.1 million in the 2014-15 financial year, Mercer is adamant that the acquisition makes perfect sense.

"It's fully in line with our growth strategy, and it is materially earnings accretive," he said.

Mercer said that he anticipates the six-year-old software development company, specialising in custom mobile apps, will be wholly owned by Melbourne IT at the end of 2017, with options already in place.

"The price we pay is completely dependent on the performance of the business for the remaining percentage of the business. If the business hits the targets we have set, we expect that the total consideration value will be AU$67 million."

Outware Mobile founders Eytan Lenko, Gideon Kowadlo, and Danny Grog will stay with the business they established in 2009, continuing to lead their sector after the acquisition.

The acquisition of Outware Mobile follows Melbourne IT's AU$15.5 million purchase of Uber Global earlier this year.

Melbourne IT also spent AU$1.25 million on a one-off investment in November last year on social media marketing platform, Tiger Pistol.