Melbourne IT takes majority stake in Outware Mobile

Firm will acquire 100 per cent of mobile app developer by 2017

Melbourne IT (ASX: MLB) has taken a majority shareholding of 50.2 per cent in mobile app developer Outware Mobile for $21.7 million.

It eventually plans to acquire 100 per cent of the company by 2017.

Melbourne IT CEO Martin Mercer told investors on an earning call that together, the company will become the leading software enabled cloud solutions provider in Australia.

“This acquisition will enable us to deliver a complete and comprehensive service. It’s firmly in line with our growth strategy,” he said.

“We expect that Outware will make approximately $3.1 million earnings before interest, tax, depreciation and amortisation [EBITDA] this financial year before transaction costs of $1.7 million,” he added.

According to Mercer, this will create opportunities to accelerate the acquisition of new customers as a result of the expanded breadth of services it can now offer to the market.

The three founders of Outware Mobile, Danny Gorog, Eytan Lenko and Gideon Kowaldo, will remain with the business. The firm was founded in 2009.

Melbourne IT executive general manager Peter Wright said that Outware will be incorporated into the business while continuing to seek new customers.

“We will share marketing capability across the group so that we can communicate not just the value of the practices but the combined offerings of cloud and bespoke solutions,” he said.

“We commissioned a piece of work to look at the size of the Australian enterprise mobile application market. The conclusions we found that the market is worth somewhere in the vicinity of $550 million per annum,” he said.

This is the latest in a string of acquisitions for Melbourne IT.

In February, it acquired Canberra-based cloud services provider, UberGlobal Group for $15.5 million.

UberGlobal provides domain registration, hosting and cloud applications. It has 70,000 customers and over 400 resellers in Australia.

In November, Melbourne IT invested $1.25 million in Melbourne-based social media marketing platform provider Tiger Pistol as the IT services firm looks to provide social media management services to customers.

Follow Hamish Barwick on Twitter: @HamishBarwick

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