Home Deals Melbourne IT becomes full owner of Outware

Melbourne IT becomes full owner of Outware

ASX-listed Web hosting and domain registrar company Melbourne IT has become the owner of custom mobile apps developer Outware Systems, acquiring the remaining 24% of the latter about six months before it planned to do so.

The sale price was $26.9 million, bringing to $57.84 million the total price paid.

In 2015, Melbourne IT picked up 50.2% of Outware for $21.7 million and also acquired the right to fully own the business in two tranches of 24.9% each over the next two years.

The amounts payable for these tranches were to be calculated based on Outware's EBITDA on 30 June 2016 and 2017 respectively.

The second tranche was bought in August 2016 for $9.24 million.

The payment for the third tranche is about $2.3 million less than what was expected, Melbourne IT said in a media release.

"Of the $26.9 million purchase consideration, $23.2 million is payable immediately with the balance ($3.7 million) placed in escrow until 1 January 2018," Melbourne IT chief executive Martin Mercer said.

"The balance in escrow will include $1 million of Melbourne IT shares, which will be purchased on market. All costs associated with this transaction will be funded from Melbourne IT’s existing debt facility.

"Melbourne IT is delighted with the performance of Outware mobile over the past 18 months. The total consideration paid by Melbourne IT for Outware is $57.84 million which represents a 4.7 multiple to its forecast 2017 EBITDA."


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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.