Atturra (ASX: ATA) is looking to become one of the nation’s largest IT services providers after announcing plans to acquire Sydney-based cloud tech investor MOQ (ASX: MOQ) for $15.5 million today.
Representing around 34.1 per cent of MOQ shares on issue, all MOQ directors and CEO Peter Ward - who sold his data platform and analytics company WARDY IT Solutions to MOQ for $7.5 million three years ago – will vote in favour of the acquisition.
Ward came on as a general manager for MOQ after the firm acquired his Brisbane-based company, which he was in control of when he won the technology category at the 2018 Australian Young Entrepreneur Awards.
Under the agreement, Sydney-based Atturra will invest $5 million in MOQ post-acquisition to drive operational improvements and systems enhancements. The majority of the capital injection will be made within the first 12 months of the transaction being completed.
ATA has offered to buy 100 per cent of MOQ’s shares for 5 cents in cash per MOQ share.
“The combination of MOQ and Atturra accelerates Atturra’s growth and is a positive step towards the fulfillment of our vision in becoming Australia’s leading IT solutions and advisory organisation,” Atturra CEO Stephen Kowal said.
“This acquisition is directly aligned to our prospectus objective to expand our managed services through potential acquisition. Post-acquisition Atturra plans to invest heavily in the MOQ business to accelerate its growth, and to ensure that appropriate systems and practises are in place to support the growth.
“We see this more as a strategic partnership allowing Atturra to grow its national presence across target industries. It also provides both teams with further access to growth as there is very little client overlap.”
Formerly known as Montech Holdings, MOQ develops, builds and acquires cloud-based technology businesses.
Four months ago, the company announced it would commence a formal strategic review in order to maximise shareholder value.
It came as MOQ reported an underlying EBITDA loss of $4.3 million for the first half of FY22, representing a significant dip from the $2.2 million profit announced a year prior. The company acknowledged its professional services contracts were unprofitable during that time, but claimed it has made “progress” on fixed fee arrangements.
However, the group noted revenue was up 22 per cent to $42.4 million, with the majority stemming from the group’s managed services arm ($25.2 million) followed by recurring revenue ($10.7 million) and Azure cloud services ($1.8 million).
This year MOQ has seen two non-executive directors leave their roles, with Joe D’Addio stepping down in April and Joseph Fridman leaving the company two months later.
ATA said the purchase is an excellent opportunity for the company to offer its entire client base comprehensive 24/7 managed services, and cost-effective monitoring and support from offshore.
“The board of MOQ views the Atturra offer as a compelling opportunity for MOQ shareholders to realise immediate value for their shareholding,” MOQ non-executive chairman David Shein said.
“We are confident that this merger will have a positive impact for both our existing and future customers by leveraging the combined group’s significant experience, product knowledge, IT expertise and resources.
Monash Advisory is acting as financial adviser and Thomson Geer is acting as legal adviser to MOQ.
Founded in 2015, Atturra offers consulting, cloud management, data integration and management control solutions. While ANZ Corporate Advisory is acting as financial and corporate adviser to ATA, HWL Ebsworth is acting as legal adviser.
“The Atturra transaction will provide significant career opportunities for our staff and we look forward to the journey ahead,” Shein said.
The deal is subject to a matter of conditions, including the approval by MOQ shareholders and the Federal Court of Australia.
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