A statement from archTIS issued to the ASX on Monday said assets acquired included the intellectual property to cp.Protect, an advanced SharePoint on-premises data encryption solution, and cp.Discover, a data discovery and classification platform.
Both products complement archTIS’ NC Protect solutions.
archTIS global chief operating officer and US president, Kurt Mueffelmann, said: “We have worked with the Cipherpoint software team for some time through our existing mutual reseller arrangements. The asset purchase is a logical next step in the relationship.
"The bolt-on acquisition represents excellent value for archTIS shareholders (~3.8x current annual recurring revenue) with the delivery of many long-serving, high profile customers and partners, as well as extending markets in Europe and Singapore.
"Moreover, the industry-ready Cipherpoint staff will slot readily into our active EU/America offices and bolster our sales efforts in these markets.”
archTIS will pay $1.4 million in cash for Cipherpoint, with $200,000 of the initial purchase price held in escrow until the novation of certain contracts. An additional $1 million will be paid based on total contract values of contracts assigned to archTIS as of 31 March 2022.
This additional consideration will be settled through the issue of shares under the Company’s 15% placement capacity after 31 March.
The Cipherpoint software division generates $370,000 in annual recurring revenue for current contracts and has government and defence clients across Europe, Asia and the Americas.
The asset purchase is projected to be immediately accretive to the archTIS financials with Cipherpoint staff in Europe (Heilbronn, Germany) joining the organisation.
Cipherpoint executive director, joint company secretary and chief operating officer, Steven Bliim, who will join archTIS as vice-president – Business Development, EMEA, said: “I am excited about this transaction, especially in its potential to deliver growth opportunities for both businesses in addition to the sales and support systems already well established in archTIS.
"With a number of new pipeline opportunities already underway, I look forward to further cultivating an even stronger working relationship as a member of the archTIS team.”
archTIS managing director and chief executive Daniel Lai said: “I’m pleased to add the Cipherpoint technology, support and sales teams to archTIS.
"The acquisition clearly demonstrates our fiscal responsibility and our ability to consistently execute on what we have communicated to shareholders and the market around targeting acquisitive growth. We are capital-efficient in how we price and evaluate deals and we’re not afraid to look out of the box for this or other acquisitions.”