TECH DEALS: Mining for tech gold

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.

QMASTOR, Triple Point Technology, Gemcom

The global commodities boom is not just a time of plenty for Australian miners and contractors but also for technology companies that are in the business of providing the specialist software and services to the sector. The sector is dominated by a few players at the moment but a takeover offer for one budding Australian outfit highlights the allure these companies hold for foreign heavyweights. The target is New South Wales-based QMASTOR Ltd (QML) which has received a $19.3 million cash offer from US software outfit Triple Point Technology. The bid has been unsurprisingly rejected by QML but it's still early days. The target posted a 59 per cent jump in revenue to $5.6 million in the first half, with earnings on the way up. QML's largest shareholder, Microequities Asset Management, has slammed the 23 cents a share offer describing it as highly opportunistic and seriously low ball. The company expects $14 million in revenue for the full year with EBITDA of approximately $3 million. With the majority of its clients involved in the coal and iron ore industry and given the current buoyant conditions in the commodities sector Triple Point will need to return with a sweeter offer. QML is being advised by InterFinancial Corporate Finance and Thynne & Macartney, while Triple Point is being assisted by PKF Corporate Advisory with Norton Rose Australia and Roberts McGivney Zagotta providing the legal advice. Meanwhile industry heavyweight Gemcom, which is a far bigger creature than QMASTOR and boasts every single heavyweight miner as its client, has opened a brand new office in Kazakhstan's capital Almaty. With Central Asia increasingly in the sights of global mining giants the move to Almaty is a good move by Gemcom and puts it a lot closer to the action.  

Net Registry, Distribute.IT

Melbourne-based web hosting provider Distribute.IT (Distribute) which was taken apart by a malicious hack attack last week has been absorbed by its bigger rival Netregistry Group. Netregistry said that it has acquired Distribute and its offshoot Click n Go's customers and assets for an undisclosed sum and will be assisting with resources and solutions to all Distribute customers. Things went pear shaped for Distribute last week after an attack, reportedly from LulzSec, took out four hosting servers – Drought, Hurricane, Blizzard and Cyclone – and permanently erased emails, files and websites. The attack basically left 48,000 accounts with no recourse after Distribute said that the information was unrecoverable. It wasn't just direct customers who got burned but the Distribute's network of domain resellers, web builders, designers were also affected. While venting their spleen at a hapless Distribute is not going to help them get their data back the entrance of Netregistry does bring a modicum of stability. Netregistry boss, Larry Bloch, said that the move was not on the cards before the attack but his business is in a position to offer a proven cloud infrastructure solution to Distribute's customers. The arrangement has the support of .au Domain Administration Ltd (auDA), which has been working closely with Distribute and Netregistry to ensure a satisfactory outcome. All of Distribute's customer base will be given the option of moving their services on to Netregistry with hosting customers to be placed on a secure cloud clustered, load-balanced infrastructure

UXC Limited

Listed IT services company UXC Limited's decision to consolidate its three IT infrastructure units – Integ Group, XSI Data Solutions and UXC Connect – under one banner has been welcomed by investors and analysts and the talks is that the move will ensure an uptick in UXC's share price. The new look UXC, will be focusing on its core IT business, which is fundamentally sound, but that means a whole lot of the non-IT assets will need to be divested and there might be some action on that front sooner rather than later. UXC managing director Cris Nicolli has told media that the company may be able to sell its Field Solutions Group (FSG) as early as the first quarter of the new financial year. While, UXC's IT operations are forecast to generate revenue in excess of $500 million this year the FSG unit has also been slowly building its revenues. However, FSG does not fit into the new look UXC and Nicolli has flagged that there is already some interest around the asset. A successful sale will go a long way in putting UXC on the right track and to think that it was only last year that the company was looking to sell its IT business to pump more money into FSG.

REA Group, IPGA Limited

There's some interesting things afoot at the property sector which may potentially have some implications for the biggest online player in the real estate game, REA Group. The $1.5 billion group, majority owned by News Limited, operates realestate.com.au and has now reportedly ticked off some of Australia's largest real estate companies to such an extent that they are now planning to build an alternative of their own. The likes of LJ Hooker, Ray White, Raine & Horne and Century 21 are now reportedly looking to band together and create an online rival with Real Estate Institute of Australia president David Airey telling the Australian Financial Review, that the move dubbed “Project Rebellion” has been precipitated as a response to rising costs of internet advertising and real estate data access rights. Now REA shares did slip a bit on the news but real estate companies don't have a great track record with this sort of thing. A number of major players own a part of Homebound, which hasn't been a roaring success and it will take something pretty special to knock realestate.com.au off its perch as the market leader. Staying with property portals, IPGA Ltd, the owner of iproperty.com – a network of property portal sites focused on Asian markets, has attracted the interest of German media company Axel Springer, which has picked up a 9.4 per cent stake in IPGA through its subsidiary SeLoger.com for $8.9 million. The iproperty brand is active in Hong Kong, India, Malaysia, Indonesia and Phillipines and the deal will help Axel Springer get exposure to the booming Asian market and IPGA some more cash to fund its growth in the region.  

NBN Co, Fujitsu, CSC, iSoft, Bridge Point Communications

The long awaited signing of the $11 billion deal between Telstra and the federal government with regards to the National Broadband Network soaked up a lot of ink last week but there was activity behind the scenes as well with the NBN Co outsourcing its basic IT service desk responsibilities to Fujitsu under a contract worth $25 million over three years. Fujitsu will now provide first-level IT helpdesk for NBN Co's internal staff over both desktop and distributed computing infrastructure. Meanwhile, iSoft's US suitor, CSC, has received unconditional clearance from the European Commission (EU) to proceed with its $460 million acquisition. The EU clearance means that CSC has cleared all the regulatory hurdles, so it all hinges on the two shareholder meetings scheduled for July 15. Elsewhere, Queensland-based security and network integration provider, Bridge Point Communications, is set to merge with data centre services company, Server Central. According to IT Wire, the companies have agreed to merge on June 30 and plan to integrate as quickly as possible. Server Central will come under the Bridge Point's banner with its entire staff to be retained.

Google, Admeld, Facebook, EA Games, PopCap Games, Hulu

Moving to international news, Facebook has welcomed Reed Hastings, the chief executive of Netflix, to its board and the move may well be designed to provide the social network with much needed expertise when it comes to expansion into online video and also the much-heralded IPO in 2012. The Microsoft board member should help foster the relationship between the two tech companies and will also bring a lot to the table when it comes to online video, which could come in handy if Facebook decides to take on YouTube, Hastings also oversaw the 2002 IPO of Netflix so that's some more hand-on experience that could come in handy. Speaking of videos, there is talk that online video service Hulu may be considering a potential sale after an unknown bidder made an offer for the company. Meanwhile, Google is reportedly staring down the barrel of an antitrust investigation launched by the US Federal Trade Commission (FTC) that could potentially leave the internet giant mired in years of legal limbo. According to The Wall Street Journal, the FTC has reportedly called for the probe to deduce whether Google has used its dominant standing in search to improperly promote its products at the expense of its competitors. The speculation of a move by the FTC has been doing the rounds since Google announced the proposed $US400 million deal to buy Admeld but this investigation seems to go far beyond that. In other news, EA Games is apparently active on the M&A front again with the games publisher reportedly looking to buy PopCap Games, the brains behind free online games like Bejeweled, Zuma and Plants vs. Zombies. The speculation was first given air at Tech Crunch and is not entirely surprising given that the mobile gaming sector is hot right now and with PopCap churning out a profit since 2000, there was talk of an IPO. That usually brings suitors to the table and EA Games has been awfully acquisitive off late. Finally, PC maker Dell has acquired cloud memory startup RNA Networks. The financial terms of the deal were not disclosed.