TECH DEALS: Archer's crucial miss

Tech Deals is a weekly column covering the latest deals in one of the busiest sectors for M&A. To read previous articles go to our Tech Deals page.

MYOB, Archer Capital

The private equity owner of accounting software provider MYOB, Archer Capital, is reportedly looking for an exit with plans to boost the business through a bolt-on acquisition reportedly stalling. Archer Capital bought MYOB in 2009 after quite a struggle - the private equity operator lobbed an attractive but non-binding bid in early 2008 and then returned with a more concrete $1.15 a share bid in conjunction with global investment firm HarbourVest Partners, with the proviso that the bid price would rise to $1.25 a share if it managed to achieve full ownership. That bid was summarily dismissed by MYOB's management but it cost them the support of key shareholders. After a hefty tussle and a slight sweetener Archer and HarbourVest took full ownership in January 2009. So after spending close to $400 million on MYOB the idea was to beef up the successful business with acquisitions and there was talk a couple of months ago that MYOB may even be back on its way to the ASX.

However, it looks like there is a new twist in the story. Archer was reportedly in talks to buy New Zealand-based accounting service Banklink for about $80 million but has now pulled out of the talks and is mulling its exit options. According to the Australian Financial Review, Archer has enlisted the help of UBS to work out its strategy and given the perilous state of the IPO markets a trade sale looks like the most likely option. Archer won't have to look hard to find a buyer with The Australian reporting that its peers – Kohlberg Kravis Roberts, Bain Capital, Warburg Pincus – would be interested and a transaction will come down to just how much they are willing to pay for what is a strong business. MYOB has posted some solid growth in recent times with fiscal 2011 earnings of over $100 million and plenty of money invested into product development. While a formal sale process is not on the table right now the business could fetch a price tag well north of $800 million and The Australian reports that Archer and HarbourVest may be angling for about $1.4 billion.  

Vivid wireless, AAPT, Oracle

Seven Group Holdings' mobile broadband arm, Vividwireless (vivid), is on the lookout for a carrier to start the deployment of its TD-LTE network by next year, with the mobile broadband operator's CEO Martin Mercer telling ITWire that vivid was in talks with two carriers to help fund the rollout. Presumably the deal will involve the successful carrier taking a share in the business and Mercer has told ITWire that for the time being Seven is in no mood to sell out of the business. In other telecom sector news, AAPT has teamed with Oracle to offer a new cloud-based service aimed at medium to large businesses. The Solaris-as-a-service product will allow customers to avoid buying and maintaining their own IT infrastructure and AAPT boss David Yuile said the telco now has the internal infrastructure team and virtual service delivery platform to market external IT services to its customers. The cloud service will be rolled out to all six AAPT data centres in Australia with more details to be revealed in this week's InSync 11conference in Sydney.

Adstream Holdings, Telstra Holdings

Telstra has sold its majority stake in ad delivery service Adstream's Australian and New Zealand operations to fellow shareholder Paul Ramsay Holdings. Adstream Holdings sold a majority interest in its Australian subsidiary to Telstra in 2006. The agreement included an exclusive license to market Adstream's advertising management technologies in the Australian and New Zealand markets. Adstream, which helps local ad agencies deliver material to media owners, has been run under the auspices of Telstra's Sensis unit since 2006 and the deal now brings the company under the same ownership umbrella as the rest of its international operations. Paul Ramsay Holdings also has significant interests in Prime Media Group and Ramsay Health Care.

Hansen Technologies, Hunter Hall, Candle, UXC, Seek  

In other local tech news, billing software developer Hansen Technologies' shareholder, Hunter Hall International, has sold over 1.5 million shares on market at an average price of 94 cents a share. The move by the institutional investor comes at a time when Hansen's stock has been performing well. It hit a high of $1.05 in February and has been trading around 94 cents for a while. The company last month won a billing and customer care contract with new Spanish mobile service provider Tu Mobile.

Meanwhile, IT recruitment firm Candle is opening an office in Hong Kong as a first step to building a network of branches in South East Asia. According to ITNews, Morgan Stanley, Wells Fargo, ANZ, IBM, HP and KPMG have signed up as foundation clients for Candle in Hong Kong. Elsewhere, IT services company UXC has revealed how much it's going to earn from the sale of its Field Solutions Group unit to Cashel House. The sale was announced last month and UXC has told the market that it expects to net $61 million from the deal.

In appointment news, Seek and Brambles have both installed new chief information officers, with the online jobs website appointing David Gibbons to the role and the pallets supplier has appointed Jean Holley as group senior vice president & chief information officer. Gibbons will start his stint at Seek in October while Holley starts her role next month  

Living Social, Ticket Monster , British Airways

Living Social has made a major move in Asia with the world's second biggest group discount website by customers swooping on South Korea's Ticket Monster. The buy is the latest in LivingSocial's strategy to beef up its presence in Asia and follows recent deals in south-east Asia and the Middle East. Ticket Monster has been around for just over a year and since then has clocked up over two million registered users and built close to a 45 per cent of market share in a competitive Korean market. Asia is shaping up as an important battleground for discount deals operators and with Groupon moving into China in February the Ticket Monster deal is an important one for LivingSocial, allowing it to keep pace with its biggest rival. Meanwhile, the discount site's Australian arm is partnering with British Airways to offer discount deals on long haul flights. The deal will see Living Social offer discounts on flights departing from Sydney to the UK and Europe. BA is the first international carrier to list long-haul flights on the LivingSocial platform. Elsewhere, Living Social has also started spruiking deals for Weight Watchers.

Groupon, Samsung Electronics, Facebook

Meanwhile, Groupon has bought Chicago-based Ruby on Rails (RoR) software developer Obtiva for an undisclosed price. RoR is an open source web application framework for the Ruby programming language. The deal will see Obtiva's team of engineers join Groupon's team and Groupon said the teams have been working hand in hand for the last two years so bringing them in-house was the only logical step. Meanwhile, Korean semiconductor giant Samsung Electronics has acquired Californian start-up Grandis, a maker of magnetic random access memory (MRAM) technology known as spin transfer torque (STT-RAM). Details of the deals were not disclosed and Samsung said the company will be merged into its R&D operations. Finally, Facebook has acquired interactive software maker Push Pop Press, which is developing applications for digital books. The outfit was the brains that powered the digital version of climate crusader Al Gore's book “Our Choice”. The company was founded by former Apple design prodigy Mike Matas. While Matas and his team will join Facebook the social network has no plans to release digital books any time soon.