Commander Communications is set to pay $3.5 million for managed outsourced telecommunications provider and Panaseer subsidiary Jtec.
The companies announced on Thursday that they had conditionally signed contracts in a deal that would strengthen Panaseer's position as a provider of managed VPN services and expand its services to corporate and government sectors within Australia.
The acquisition would be funded from operational cash flows and Commander's $79 million line of credit with its bankers. Jtec is Panaseer's only operating business.
The company said it expected the acquisition would deliver revenue in excess of $15 million in the first year and be earnings per share positive in the last quarter of FY2004.
The companies claimed that, combined, they would be a 'greater force' in the SME and corporate market for data, voice, video, mobility and managed networking services. Panaseer would provide Commander with additional critical mass in the data services business,' said Adrian Coote, MD at Commander.
The shareholders of Panaseer Limited (PSL) must approve the sale, a Commander statement said. Approval must be obtained by 12 February, the company said.
Noel Robertson, MD at Panaseer, said the company had built a very successful business in the VPN and WAN market, growing at 40 percent compounded per annum over the past couple of years.
If the business wasn't sold, the company would have had to 'compromise growth' to 'protect the limited funds we had in the business,' said Robertson. 'Organic growth would have been limited,' he said.
Panaseer has 62 staff which would all move across to Commander, including Robertson. The company would become an operating division of Commander, he said. 'It's a good deal for Panaseer shareholders and the fit with Commander is excellent,' he said.
Commander shares were two cents lower at $1.16 per share on Thursday afternoon trading. Panaseer shares were trading at 5.4 cents.