TECH DEALS: Stokes ignites Engin

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.

Kerry Stokes, Engin Limited, Landis Gyr

Media mogul Kerry Stokes has renewed his quest to gobble up broadband telephone services provider Engin Limited and it looks like he might have a better chance of winning this time around. Seven already holds 57.33 per cent of Engin through its subsidiary Network Investment Holdings and Stokes pitched his original 70 cents a share offer for the minority interest last December. The original offer was scuttled by minority shareholder Stuart Howe who effectively kicked up enough of a fuss for Seven to scrap it in January. Seven has now returned to the table with a sweeter 90 cents a share offer which has evidently won over Howe, who has told Engin minority shareholders that he is not going to fight Stokes on price this time around. Engin's independent chairman and former Yahoo7! boss Ian Smith has appointed independent expert Lonergan Edwards & Associates to evaluate the latest bid. Lonergan Edwards actually backed the last bid so no prizes for guessing what their recommendation will be this time around. Meanwhile, Stokes is set to reap a healthy harvest from another one of his investments in the tech space with his seed investment in Cameron O'Reilly's Bayard Capital set to bear fruit. Stokes was one of a few local corporate heavyweights, including John B. Fairfax and former Lion Nathan chairman Doug Myers, who put money into Bayard in 2003. The company that started as an investment firm ended up buying the world's largest electricity meter manufacturer Landis Gyr in 2004 for $250 million. The move was designed to tap into the market for smart meters, which allow power and gas companies to get more timely information on energy consumption without sending out meter readers and keep a closer eye on capacity and energy management and it may have taken a while but O'Reilly has now managed to sell the business to Japan's Toshiba $2.2 billion.  

iSelect, InfoChoice, Google

Internet giant Google's announcement to roll out its all in one financial products comparison site Google Advisor should give us some understanding of the rationale behind online comparison website iSelect's move to snap up rival InfoChoice last week. Ninemsn-backed iSelect flexed its muscles with the $33.5 million acquisition of InfoChoice. The fact that iSelect is willing to pay a 70 per cent premium to InfoChoice's market price of $19.2 million indicates that the company's founder and chief executive Damien Waller is keen to make iSelect the one stop comparison site in the market as more customers move online for advice. Waller's strategy is to boost iSelect's product range and the InfoChoice deal helps the company, which started out in 2000 as a private health insurance broker, add home loans and other financial services to its roster. As Technology Spectator editor Charis Palmer points out the move to the financial arena could be a gamble given that the likes of InfoChoice, RateCity and Mozo haven't had the same success as their peers overseas. However, building scale in the local comparison market is the best way forward for iSelect to dominate and eventually absorb the competition, especially if it wants to keep search engine giants like Google out of their turf.

Nine Entertainment, Style Tread, DesignCrowd

Online retailers continue to attract big name investors with online shoe seller Style Tread the latest to figure in Nine Entertainment boss David Gyngell's ambitious digital media strategy. According to The Australian Financial Review, Nine Entertainment has taken a 20 per cent stake in Style Tread for an estimated $4 million. The move comes on the back of the launch of Nine's very own group buying site Cudo in August. Aside from how this move fits into Nine's plans to diversify its portfolio, it highlights the growing trend of more investment dollars flowing into the local tech sector, especially in start-ups. It's important to remember that Style Tread has only been in business for about six months or so but the Nine deal values it at around $20 million. The four million dollars may not be a lot in the grand scheme of things for Nine but for an up and coming startup like Style Tread its manna from heaven. Style Tread is just the latest online retailer to come on the investment radar but the likes of 99designs, Atlassian and Oxforex have all welcomed investment in recent times. That trend looks unlikely to stop in the near future and in fact design crowdsourcing service DesignCrowd has told The Next Web's Joel Falconer that it has already received a number of approaches from venture capitalist keen to invest their money in the firm. Meanwhile, former Nine heavyweight James Packer is helping online retailer Catch of the Day expand into online grocery retailing, according to The Australian.

Certus Solutions, Focus Strategies, Endace, Newgen, eWay, Fosters  

Australasia's largest pure play IBM software and services provider, Certus Solutions, has moved to extend its presence in the region with the acquisition of one of IBM's largest software resellers in Australia, Focus Strategies and Solutions, for an undisclosed sum. Focus, which has been in business for eight years, has annual revenues in excess of $13 million and more than 50 staff operating in Sydney, Melbourne, Perth and Canberra. The deal will boost Certus' growth projections for the upcoming fiscal year with income forecast to reach $65 million. Meanwhile, New Zealand-based intrusion detection and data analytics specialist Endace has signed Melbourne-based Newgen as its first Australian channel partner. Newgen will now start marketing Endace's suite of network monitoring, packet capture and analysis, and threat detection products. Elsewhere, local online payment provider, eWAY, has reportedly moved into the UK e-commerce market. According to ARN, the company will offer the full eWAY payment service and online revenue management tools to SME customers in the UK. The operations will be run by newly hired Australian-born business development director Nick Adams. Finally, Foster's Group has found its new chief information officer with Dean Matthews set to start today (Monday May 23^rd). Matthews, who has previously held senior technology roles at Transurban, MLC, Lend Lease and Linfox, will replace Andrew Leyden who left Foster's at the end of last year.  

LinkedIn

LinkedIn's IPO undoubtedly defied the expectations of its own management after the online professional social networking company's shares more than doubled in their public trading debut. LinkedIn ended the day valued at around $US9.1 billion that's three times what LinkedIn's management was hoping to score. The network's shares closed up 84 per cent at $US94.25, well above its initial offering price of $US45, but lower than the astronomical intraday high of $US122.70 and the shares managed to hold their ground in the second day of trading, slipping just 1.2 per cent. Given that LinkedIn posted a 2010 revenue of $US243 million and earnings of $US15.4 million it's no surprise that many in the market are wondering just what the investors are having for breakfast. LinkedIn's IPO is in some ways a small preview of what may be in store when Facebook has its day in the market. LinkedIn is no Facebook so one can only imagine the mayhem when Mark Zuckerberg decides to go public. There's a good chance that LinkedIn will find it hard to sustain the open frenzy but the network's founder Reid Hoffman and CEO Jeffrey Weiner won't be complaining that their company is now worth more than motorcycle maker Harley Davidson and ratings agency Moodys. Hoffman is now worth $1.8 billion, while Weiner is worth $213 million.

Microsoft, Nokia

Microsoft may have spent the last week or so trying to convince the market about its mammoth acquisition of Skype but there are already new rumblings that the tech heavyweight may now have its sights on Finnish giant Nokia's phone businesss. According to a report on Mashable, Russian blogger, Edlar Murtazin, has flagged that Nokia is set begin to talks with Microsoft this week, with a potential deal earmarked to finish before the end of the year. Murtazin adds that both companies are in a hurry to seal a deal. Microsoft and Nokia have already been working together since February on making Windows Phone 7 Nokia's primary smartphone platform as the Finnish company looks to fend off Google and Apple's dominance in the smartphone department. Microsoft has the money for any potential deal which would make some sense after the Skype acquisition if the company is serious about becoming a player in mobile manufacturing and distribution. Conversely, not only does Microsoft have a bad track record with cellphone manufacturing but analysts reckon it would go against Microsoft's philosophy of not getting overly involved in the hardware side of things.

Wrapping up

Apple has reportedly signed a licensing deal for a cloud music service with EMI, and CNET reports that it is also very close to sealing similar deals with Sony and Universal. This could be another step in Apple's plans to release its rival to Google Music. In other news, UK-based cloud-based legal and eDiscovery services firm Autonomy has acquired Iron Mountain's digital archiving, e-discovery and online backup businesses for $US380 million in cash. Virtualization software giant VMWare has agreed to acquire Shavlik Technologies, a provider of cloud-based IT management solutions for small and medium businesses. The financial terms of the acquisition, which is expected to be completed later this year, were not disclosed. SanDisk is paying $US327 million in cash to buy high-end enterprise solid state drives maker Pliant Technology, which will now become SanDisk's enterprise NAND flash division. The transaction is expected to close in the next three months. Finally, security and storage software company Symantec Corporation's chief executive Enrique Salem has told Reuters that he is hungry for acquisitions and will soon give investors a glimpse of how he is hoping to deploy Symantec's war chest of $US3 billion.