Published on the 04/12/2013 | Written by Newsdesk
As part of a long-term expansion plan, listed Australian software and services business UXC Ltd has bought Keystone Management Solutions which it claims is the region’s largest ServiceNow reseller…
Little more than three months after announcing a partnership with Keystone Management Solutions, UXC has gone on to buy the company for a mixture of cash and shares with a value close to $28 million.
With over 120 ServiceNow customers Keystone boosts UXC’s cloud computing footprint, while the merger also provides ServiceNow with a much larger regional partner.
Explaining his strategy UXC managing director Cris Nicolli said that the Australian market was “not necessarily in a buoyant state” and that to achieve UXC’s growth ambitions the company was looking to a number of other mergers and acquisitions. UXC recently bought WhiteLabelled an e-commerce company in the SAP space, and Nicolli said the company was exploring two or three potential acquisitions in the US.
He said the company had a line of credit with its bank that would allow it to invest $30-$40 million in acquisitions at a time of particularly low interest rates.
The purchase of Keystone also strengthens the stream of annuity revenues for UXC and adds 60 staff, bringing UXC’s total headcount to around 2700. The company has already stated its intent to build annuity revenues, from the sale of cloud services, to more than 30 percent of revenues over the coming three years.
UXC, which is Australia’s largest ICT business, this year reported annual revenues of $594 million, up from $560 million in 2012. The company, which has a long-held ambition to reach $1 billion of annual revenues in order to compete effectively with international rivals, also reported a 25 percent increase in net profits to $22 million.
According to Nicolli the completed and planned acquisitions should take the company’s revenues to around $700 million this financial year. He said that while the $1 billion target was not “critical to us, it would be a milestone for the market”.
Relying on purely organic growth to reach that target was not an option he said, given that the “market is not that hot – even regressing”. He said major companies such as Westpac and Telstra were putting a lot of pressure on panel pricing which was having an impact on revenues across the ICT services sector.
“Our growth is reliant on mergers and acquisitions until conditions pick up a bit,” said Nicolli although he claimed the company was still managing 4-5 percent organic growth.
