Melbourne IT (ASX:MLB) said today it has entered into a Share Purchase Agreement for the purchase of 100% of the issued capital of Uber, with the initial value of the deal at $15.5 million, plus a potential earn- out based on EBITDA performance to 30 June this year.
The acquisition coincides with Melbourne IT’s release today of its financial results for the full year to the end of December 2014, showing an increase in revenue to $124.7 million, up 21% on the previous year.
CEO Martin Mercer, said acquiring Uber Global will significantly expand Melbourne IT’s customer base and deliver material synergy benefits of approximately $3.5 million a year, and that the transaction is consistent with the growth strategy approved by the company’s board.
Simon Jones, Melbourne IT Chairman said the board sees the acquisition as a “major opportunity to achieve additional scale and to strengthen the core domains and hosting business”.
“It also aligns with the Board’s stated requirement that such acquisitions be earnings accretive from day one,” Jones said.
As well as a strong revenue performance last year, Melbourne IT reported net profit after tax (after normalising for impairment and transaction costs arising from the acquisition of Netregistry) for the full year 2014 was up 27% to $7.9 million.
Mercer noted that the results were supported by the full year impact of cost savings realised in late 2013 and the acquisition of Netregistry.
Mercer reaffirmed that total synergies of $7.5 million, being fully realised over the 2016 FY, are anticipated from the integration of Melbourne IT and Netregistry.
The board has declared a final dividend of 4.0 cents per share (80% franked).
On the outlook for 2015, Mercer said the company was confident in its ability to drive growth and profitability. “We commence 2015 with our new management team and a clearly articulated plan for future growth.”
“We have a significant market opportunity, a clear strategy, an extensive customer base, a strong balance sheet, and a renewed focus on execution. In short, we believe that we are well placed to increase sales, ARPU and profitability that will in turn lay the foundation for sustainable shareholder returns.
“Consistent with this, we are strengthening the business with an incremental investment this financial year of $5m in sales, marketing and people. The payback period on this investment is expected to be less than eighteen month.
“In 2015, we expect to achieve high single-digit organic growth in underlying EBITDA.”