Melbourne IT Group has announced it will be acquiring the remainder of custom mobile apps development firm Outware Systems for a cost of AU$26.9 million.
The closing of the acquisition will see Melbourne IT's total consideration for Outware tip AU$57.8 million.
In June 2015, Melbourne IT scooped up 50.2 percent of Outware for AU$21.7 million. At the same time, the company also acquired options to extend that ownership to 100 percent two years later, calculated on Outware's earnings before interest, taxes, depreciation, and amortisation (EBITDA) as of June 30, 2016 and June 30, 2017.
The Australian Securities Exchange (ASX)-listed company then acquired another 24.9 percent of Outware shares in August 2016 for AU$9.24 million.
The remaining 24.9 percent purchase announced on Thursday will be finalised six months ahead of schedule, with the figure approximately AU$2.3 million less than previously expected. The final sum is dependent on Outware achieving its June 30, 2017 forecast, however.
Melbourne IT CEO Martin Mercer labelled the 100 percent debt-funded acquisition a "cracker of a deal" when it was announced almost two years ago.
"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," he said. "Together, we become the leading software-enabled cloud solutions provider in Australia."
AU$23.2 million is payable immediately by Melbourne IT and the AU$3.7 million balance will be placed in escrow until January 1, 2018, which will include AU$1 million of Melbourne IT shares available to the market, the company said.
Eytan Lenko, one of the three founders of Outware, will become the practice lead for Melbourne IT's mobile segment, while co-founders Danny Gorog and Gideon Kowadlo will move into new roles within the company's Enterprise Services division.
Melbourne IT also acquired data and analytics solutions provider Infoready last year for a cost of AU$15.4 million, a deal the company partially funded through cash received from the AU$7.8 million sale of its International Domain Name Registration (IDNR) business.
The company also paid AU$15.5 million for cloud services provider and domain registration provider Uber Global Group in February 2015.
The string of acquisitions leave Melbourne IT with an Enterprise Services division comprising of mobile, data and analytics, and cloud services.
For the first half of the 2016 financial year, Melbourne IT posted AU$2.2 million in after tax profit, on revenue of AU$85 million. EBITDA for the six-month period was AU$11.2 million
Infoready contributed revenue of AU$7.3 million, net profit after tax of AU$700,000, and EBITDA of AU$1 million during the 2016 financial year.