Destra buys Techex for $1.5m plus

Stan Beer
Wednesday, 06 October 2004 10:44

IT Industry - Development

Web hosting service provider and online music retailer, Destra Corporation Limited (ASX:DES) is forking out $1.5 million upfront in shares and cash to buy communication services provider Techex Communications Pty Ltd (Techex). Techex is a supplier of business grade data communication services.

Destra CEO, Domenic Carosa, says the Techex data communications services would complement Destra's own web hosting and domain registration services. Carosa said the acquisition is part of the company's strategy of broadening its business offerings.

Techex had revenues of around $4.5 million for FY04, with EBIT of over $700,000. The purchase consideration includes a first tranche payment of $1.5 million composed of $1.2 million in Destra shares and $300,000 cash. A subsequent second tranche payment is to be made after a 12 month earn-out period. According to Carosa, the purchase price was based on a two times earnings formula and the second tranche payment would depend on the earnings after 12 months. Carosa, said, "The $1.5 million was two times current earnings and after 12 months, we'll pay them a two times multiple of earnings minus the first tranche. So hopefully we can pay them millions and millions

According to Destra, it is on target to generate profit for the current financial year and the Techex acquisition should bring additional profitability to the organisation. Destra recorded revenues of $9.1 million for the FY04.

Destra hinted it is on the lookout for further acquisitions in its release to the market.