ASX-listed Nexion to buy Wellington-based MSPs Aiscorp and Silicon Systems
- 25 July, 2022 09:38
Paul Glass (Nexion Group)
Australian-listed hybrid cloud specialist Nexion is buying Wellington IT service providers Aiscorp and Silicon Systems for NZ$14.3 million.
A binding agreement to acquire the companies had been signed and would triple the size of Nexion to A$18.3 million in pro-forma revenue in 2022, Nexion told the ASX today.
The deal would also provide additional resources to underpin new contracts with blue-chip customers in New Zealand and a base for future expansion into the Americas, the company said.
“I’m extremely excited to have Aiscorp and Silicon join us on our journey to become a global hybrid cloud operator," said Nexion group CEO Paul Glass.
"Aiscorp and Silicon are outstanding businesses with long histories of delivering services in the Pacific region and will continue to operate as independent, complimentary members of Nexion Group."
Nexion, which last year teamed with IBM to launch hybrid cloud services in New Zealand, said it had a vision to deliver services in eight global regions. The completion of the acquisitions set a foundation for the second of these, called Nexion Pacific, that spanned from the east coast of Australia to the west coast of North America, Glass said.
"Our next step is Canada so a base in Wellington makes acquisitions and growth into that time-zone much more efficient.”
Nexion listed in February 2021, aiming to become a global operator of hybrid cloud and SD-WAN infrastructure through a combination of acquisitions and organic growth.
The combination of Aiscorp and Silicon’s expertise and local knowledge with Nexion’s blue chip enterprise-scale client base established a foundation capable of delivering rapid growth and strong profits, Nexion said.
The combined un-audited revenue of Aiscorp and Silicon in the year to the end of the of 31 March, 2022, was A$11.7 million and EBITDA was A$1.1 million, assuming an exchange rate of 0.90 Australian cents to the NZ dollar.
Nexion would pay a minimum number of shares calculated at 1.1 times the 2022 revenue divided by 20 cents per Nexion share with the vendors able to take up-to 42 per cent of the valuation in cash.
The purchase was subject to conditions including completion of due diligence, Nexion obtaining board, shareholder, regulator and third-party approvals and raising at least $7.4 million in cash through debt and/or equity.
Settlement would occur when all conditions were satisfied. If these remained unsatisfied after November 30, 2022, either party could terminate the agreement.
Nexion said it was negotiating with an equity funder to provide up to A$8 million and was also pursuing investment from existing shareholders.
Debt facilities up to $2 million were being considered for the second half of 2023, subject to the consolidated group demonstrating positive cash flow.
Aiscorp, valued at $8.15 million, was originally Artificial Intelligence Corporation when it was purchased by Elmar Gailitis in 1987. He transformed it into a provider of IT infrastructure solutions, which has grown into a full information technology managed services provider.
Aiscorp worked across government and private sector and in particular delivered services to Pacific islands including Niue, Tonga and the Cook Islands.
Silicon Systems, valued at $6.15 million, was founded in 1991 and is owned and managed by Liam O’Keeffe. It was recognised primarily as a managed IT services and cloud services provider with a client base spanning government, corporate and the small to medium enterprise sectors.
Nexion offers network, compute and data storage as-a-service that it integrates with public cloud services to form a hybrid cloud solution called Nexion OneCloud. The company’s enterprise ICT managed services division offers technology-as-a-service globally.