Home Industry Deals Web Hosting Melbourne IT sells most of self to the US

Melbourne IT sells most of self to the US Featured

Melbourne IT has sold its Digital Brand Services division to US-based Corporation Services Company for $152.5 million, nearly as much as the whole company is worth.

Melbourne IT’s Digital Brand Services (DBS) division provides online brand protection and consultancy services to “large global organisations seeking to maximise the value of their online assets.” The division was created in 2008 when Melbourne IT combined its Corporate Brand Services division with the Verisign DBMS business which the company had acquired for US$50 million ($48 million).

Melbourne IT Chairman Simon Jones said the agreed sale price of $152.5 million for DBS illustrates a significant growth in value of the business over the past four years, and represents a valuation of 16 times last years’ earnings of $9.5 million.

The amount is equivalent to 95% of Melbourne IT’s market capitalisation before the sale, which Jones says achieves the board’s stated objective of its recent strategic review to “unlock shareholder value by realising the intrinsic value of its businesses.”

$15 million of the A$152.5 million purchase price will be held in escrow for 15 months to cover capital gains tax liabilities, transaction and other associated costs, and other sale related adjustments. “Total returns are expected to be in the order of A$135-140  million, said Jones. “After retiring outstanding debt of US$35 million, Melbourne IT will consider a range of capital management options as a result of the sale.

“The sale of DBS is a substantial result for shareholders. It is almost equivalent to Melbourne IT’s current market capitalisation, and represents a strong multiple of earnings relative to other recent transactions for this type of business. While this was not a business that we had specifically earmarked for sale, given the value creation provided by the transaction, this was an opportunity which could not be ignored.

“Management and the board are now concentrating on updating the strategic plan for the business following the divestiture so we can provide clarity to shareholders before the AGM in May. We are confident that Melbourne IT’s remaining business divisions will benefit significantly from the arrival of new gTLDs (global top level domain names) and the completion of our transformation program.”

Corporation Service Company is not to be confused with the other CSC, the IT services company formerly known as Computer Sciences Corporation. This CSC was founded in 1899 as a legal and financial services company, and is a large ICANN domain name registrar.

FREE NETWORKING SERVICES CASE STUDY

As one of the world’s largest social networking services, Facebook handles a lot of user information, and requires input from an astounding range of stakeholders 24 hours a day, 7 days a week — from both inside and outside the business.

Discover how Facebook was helped to connect remote employees, vendors, consultants, and partners to applications and web services quickly and reliably - without risking sensitive data.

GET CASE STUDY!

GET THE IT BUDGET YOU WANT

Explore your Network Treasure Trove to get the IT Budget you want

With Australian businesses projected to spend over $78.7 Billion why does it feel like you can never get the budget you need?.

In most cases your budget will get approved because the proposals are not only technically correct, but also provide good, credible evidence on how the spend aligns with key business objectives.

Did you know that your Network Monitoring tool can help you build a comprehensive business case without an MBA?

HERE ARE 8 TIPS TO GET THE IT BUDGET YOU WANT.

CLICK HERE!

Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

Connect

 

 

 

 

Join the iTWire Community and be part of the latest news, invites to exclusive events, whitepapers and educational materials and oppertunities.
Why do I want to receive this daily update?
  • The latest features from iTWire
  • Free whitepaper downloads
  • Industry opportunities