TECH DEALS: Cudo holds the line

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.

Nine Entertainment, Microsoft, CUDO

The group buying craze in Australia had a bit of setback last weeks after LivingSocial failed to deliver on its promise of delivering dirt cheap Havaianas thongs on time when it was swamped with more than 100,000 orders. The delivery delay had some shoppers hot under the collar but as media analyst company Telsyte's latest figures show the hiccup hasn't taken the shine of the sector and news of Nine Entertainment and Microsoft deciding against selling their jointly owned outfit, Cudo, would indicate that those with money tied up with the group buying sites still see value. Rumours of Cudo being put on the block surfaced in August with the Australian Financial Review reporting Nine and Microsoft had put Macquarie Group in charge of running the sale. The business was reportedly carrying a price tag of up to $80 million, which looked like a more than healthy return on the $800,000 Nine and Microsoft had initially put into the business.

The likes of Scoopon, Groupon, Living Social and Yahoo!7 were all seen as likely buyers, but it looks like for now all prospective suitors will have to cool their heels because Nine and Microsoft have reportedly had a change of heart. According to the AFR, Cudo is now no longer on the block with sources telling the paper both Nine and Microsoft believe now is not the time to cash in their chips. They can probably afford to hold their course because overall growth in the group buying market is still strong and Cudo is reportedly in the black. The other interesting thing to come out of the latest reports is that Nine and Microsoft reckon the market is due for a shakeup and they are in a position to benefit from it. That shake up could well be consolidation which will see the list of 70 or so group buying sites currently in Australia pared down, with the market leaders absorbing some of their smaller peers. There is always a chance that Cudo could play the role of the buyer instead of seller.

CSG

There is still no word from IT, print services group and takeover target CSG with regards to the $340 million offer on the table but it looks like there is more than one buyer keen to join the fray. CSG has now received approaches from a number of parties expressing an interest and the target's board has decided to engage with them. For the time being their identities are still a mystery but Fujitsu and NTT are being touted as possible candidates. The $1.20 a share offer is not up to the mark so the possible entry of a counter-bidder will be welcomed by CSG's shareholders. Meanwhile, the one thing that they can look forward to is the prospect of a special dividend. Fund managers reportedly pointed out that any suitors will have little use for CSG's $20 million franking credits and may use the lure of a special dividend to sweeten the deal. So there is a chance that the mystery suitor, or suitors, could possibly add a 16.5 cents a share dividend to the $1.20 bid.  A $1.365 a share figure is more likely to get CSG's management excited and we will have to wait and see whether it's the right price for CSG's major shareholder and managing director Denis Mackenzie. By the way, CSG isn't letting the whole takeover intrigue cramp its style, signing a contract with engineering firm Ausenco for the implementation of an Oracle enterprise resource planning (ERP) system. Under the contract, CSG will work with Ausenco to implement the platform; the commercial details of the contract were not disclosed.

Perpetual, Macquarie Investment Management

Wealth manager Perpetual Limited has outsourced its third-party provision of portfolio and fiduciary administration services to Macquarie Investment Management. The deal will see Perpetual save a lot of money because rather than upgrade its platform administration system the wealth manager will hand over the IT development requirements to Macquarie. According to Perpetual, Macquarie will add specific functionality to an existing third-party system and administration solution, with additional features and infrastructure. The integration of the platforms is expected to take 18 months and Perpetual expects the deal to be revenue positive from 2014.

Oracle Public Cloud

Moving to the cloud computing space, Oracle has unveiled its very own cloud service, one which the software firm's outspoken CEO Larry Ellison reckons is better than anything and especially better than what Salesforce.com has to offer.  The Oracle Cloud will host client data as well as offer Oracle applications such as its Fusion suite of business software, the Oracle database and its Java programming language. There is also a social networking feature that will allow users to collaborate using all the Oracle tools, in what is a nod to Salesforce's recently released enterprise social network Chatter. With regards to what that means in Australia, iTnews reports that up to seven Australian customers have been picked as early adopters for Fusion. In other cloud news, Telstra has indicated that it is ready and willing to spend more money to feed its cloud ambitions. The telco has already spent $200 million hardware to get its platform off and running and in June announced its intentions to invest a further $800 million over the next five years. The man in charge of the telco's cloud computing operations, Mark Pratley, has now reportedly told the media that the company's enterprise division was more than capable of tapping into fresh funds if needed.

Local wrap

In other local news, technology supplier Emerson Network Power has won a $100 million contract to build 10 network facility centres for the NBN  Co. The one year contract will see Emerson design, supply and install the centres that will house the necessary infrastructure for the NBN. The facilities would be based across Australia, with two proposed centres in Adelaide, Canberra, Melbourne, Sydney and Brisbane. Meanwhile, privately-owned Infrastructure Services Group Management (ISGM) has grabbed the national contract to take over the management of all subcontractor customer installations and maintenance for copper services including telephony, broadband, ULL and jumpering activities between Telstra exchanges and customer premises. The new agreement is for five years, with a two by two year extension option, and will involve recruitment, training and mobilisation of a nationwide subcontractor workforce. The work was previously shared between Service Stream and Silcar. ISGM is co-owned by former Visionstream CEO Bob de Boer, Service Stream co-founder Adrian Field and former executive director Joseph Caporale.

Meanwhile, ANZ Bank's former chief information officer Gary Sterrenberg has been picked to run the show at the Department of Human Services, which includes the technology-heavy operations of Centrelink and Medicare, as its new CIO. Sterrenberg will replace the department's veteran CIO John Wadeson who retired last month.  Perth-based VisiInc has picked up US multimedia conferencing platform vendor VIA3 in $16 million scrip deal to launch a major push into the Australian e-health market. The deal will see the company add VIA3's advanced collaboration software and conferencing platform, with secure 3D file sharing, secure video and audio. Elsewhere, data intelligence and information analytics company Veda has signed a deal with Virgin Australia to protect the carrier's Velocity Frequent Flyers from fraud and identity theft via its Secure Sentinel service.

International news

As the tech world comes to grips with the passing of Steve Jobs it looks he has already set plans in motion that will ensure that Apple's innovation pipeline will continue to roll along. The UK's Daily Mail reports that despite his ailing health, Jobs spent more than a year ensuring that blueprints for the new iPod, iPad, iPhone and MacBooks were in place and also fought tooth and nail to secure approval for the for Apple's new headquarters in California.

Meanwhile, there was plenty of chatter last week with regards to Microsoft having another crack at Yahoo, however, it is highly unlikely that Microsoft boss Steve Ballmer will be interested in getting involved in what is sure to be a protracted and acrimonious tussle. Most importantly, Microsoft already has a 10-year search advertising deal with Yahoo which lets its search engine, Bing, power Yahoo's search and in return Yahoo becomes the exclusive search advertising provider for Bing. With that in place Ballmer may not be in a mood to engage with Yahoo any further and could watch from the sidelines as the cookie crumbles at Yahoo. One company that may be interested is China's Alibaba and the e-commerce giant's boss Jack Ma did flag his ambition at a talk in Stanford last week, however, he has reportedly toned down his enthusiasm after realising that the prospect of a Chinese company buying a major US outfit will entail severe regulatory scrutiny. The latest rumour on Yahoo is that the company's founder Jerry Yang, the man who rejected Microsoft's $US44.6 billion pitch in 2008, is looking to join forces with private equity operators to buy out the company. According to Reuters, Yang is mulling a deal that would involve rolling over his 3.63 per cent stake in Yahoo, with the other co-founder, David Filo, then expected to follow suit with his 5.9 per cent stake. The deal will see the $US20 billion company taken off the market, but whether the supposed plan will work or not will depend on the understanding Yang can reach with the private equity players and what other offers are put on the table.

Finally, speech recognition and digital imaging software maker Nuance Communications is buying industry rival Swype for $US102.5 million to beef up its presence in the next generation of smartphones and tablets. Nuance's tech is already used by Apple in its latest iPhone 4S, which features the "SIRI" voice recognition software. Seattle-based Swype makes gesture input software for smartphones based on Google's Android operating system.