ASX cyber security leader Tesserent to make $22.5m acquisition

ASX cyber security leader Tesserent to make $22.5m acquisition

Less than a week out from its admission to the All Ordinaries index of Australia's top 500 listed companies, fast-growing cyber security outfit Tesserent (ASX: TNT) has announced a deal to acquire Sydney-based Secure Logic's Managed Security Services business.

The acquisition will be financed by $10.75 million in cash and 42,145,974 shares, worth around $11.8 million at the time of writing.

Tesserent, whose shares have quadrupled since July with a 500 per cent spike in revenue in the December half, expects the acquisition to be immediately earnings accretive having generated turnover of $9 million and EBITDA of $4.2 million in FY20.

"I welcome Secure Logic to the TNT group, strengthening our position as the leading provider of Government-focused cybersecurity solutions and services in Australia and New Zealand," says Tesserent chairman Geoff Lord.

"In addition, this acquisition contributes to our FY21 $150 million turnover annualised run rate ambition."

Secure Logic's executive chairman Santosh Devaraj and managing partner Deepak Singh will head up the group's integration into Tesserent's Government practice group and ongoing operations.

Melbourne-based Tesserent is upbeat about the fact Secure Logic receives the majority of its revenue from multiple recurring multi-year, annuity-based contracts based on proprietary solutions, and sees significant cross-sell opportunities between the two companies.

"The addition of Secure Logic into our Group and Cyber 360 strategy creates substantial further opportunities, particularly in Federal and State Government where Tesserent has already been a strong performer," says Tesserent CEO Julian Challingsworth.

"Providing Tesserent's end-to-end services to our security-focused clients gives us the ability to significantly grow business and provide our clients access to a much broader solutions suite," adds Singh.

"I'm excited to be leading this natural progression for Secure Logic and very much look forward to working with the Tesserent team."

Post integration, Devaraj will turn his focus and efforts to cyber technology product companies TrustGrid and AttackBound, both of which have entered into an exclusive strategic partnership with Tesserent for their solutions to be incorporated into its Cyber 360 offering for Australia and New Zealand customers. 

TrustGrid is an innovative and patent-protected advance blockchain technology used to provide privacy-preserved, secure and private digital trust services, while AttackBound is an artificial intelligence-based Cyber Threat Intelligence platform that provides organisations a holistic view of the attack surface from a hacker perspective.

"The launch of the TrustGrid and AttackBound products are being industrialised to SaaS-based technology offerings at a time when citizen privacy across the globe is increasingly paramount," says Deveraj.

"I am excited TrustGrid and AttackBound will be supported by Tesserent and that the establishment of an exclusive strategic partnership with the Company across Australia and New Zealand will enable the TrustGrid and AttackBound products to be distributed across its customer base."

Tesserent has been on an acquisition roll for the past 18 months, and in 2020 alone it completed the acquisitions of iQ3, Seer, north, Airloom and Ludus Cybersecurity.

For the December half the group reported 500 per cent year-on-year turnover growth to $36.5 million, with a goal to hit $150 million by June 30 this year.

Tesserent ran at a statutory loss before tax of $6.18 million, but if it weren't for acquisition costs, amortisation costs and option expenses for staff, it would have been in the black with profit of close to $1.8 million.

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