The days of New Zealand's home-grown internet industry staying homegrown are limited, says Clearview Communications founder Ken Westlake.
Clearview, which is widely regarded as the country's leading corporate Web developer, announced last week it had been bought by the listed Australian internet media company LibertyOneThe sale follows Glazier Systems' acquisition by the Advantage Group, and Westlake says he expects other local internet companies to be absorbed by larger interests.
"The New Zealand market is changing permanently. It's not longer the province of some smart, early-entrant niche players, and the technology is now mainstream," he said. "Therefore, we're now treading on some very large toes. The pond is going to get bigger in terms of opportunity, but so are the fish in it."
Westlake says Clearview, which he founded four years ago with Bob Grey, began to look for a buyer this year so it could expand its own services into Web marketing, establish a presence in Australia and continue to offer career opportunities to its staff.
At the same time, he was approached by five potential buyers -- "all of them international". He says the situation is probably the same for other leading developers and service providers.
"You're seeing Terabyte up for sale, as I understand it," he said. "Netlink is up for sale -- and I'd guess that Telstra would be the favoured partner there because of their current relationship. That would give Telstra a very strong entry point into the New Zealand market. Then you've got Web masters, who I'm sure have had approaches, and companies like WebMedia, who I know have had approaches."
LibertyOne, which is backed by the Fairfax newspaper group (publishers of the Australian Financial Review, Sydney Morning Herald and others) and floated on the Australia stock exchange in late 1998 has been in expansion mode this year.
It jointly owns Excite Asia-Pacific along with Excite itself and recently launched an Australian version of the Excite Web portal, promising to launch the portal in New Zealand and Singapore.
LibertyOne also owns the digital music distributor Satellite Music Australia, interests in sports betting and personality sports Web sites and two other Web solutions companies -- Internet Reach Group and Zivo, which it wholly acquired in April after first establishing a relationship with a share swap last year.
Zivo came into the New Zealand market last year billing itself as a corporate specialist, but has achieved relatively little traction -- especially relative to Clearview, whose portfolio includes Lion Nathan, Deloitte and online newspaper development for both National Business Review and the New Zealand Herald.
"I think they realised that taking the organic growth route (with Zivo) would just have taken too long to meet their objectives," says Westlake. "So they decided to take the quick route -- and acquire market share rather than trying to grow it."
LibertyOne chief executive Warren Lee says the acquisition of Clearview is "another significant step" in LibertyOne's plans to expand its Web development and consultancy services throughout the Asia Pacific region.
"Clearview is a particularly important acquisition as it is the market leader in New Zealand with a first-class client base, an excellent brand and a strong reputation across most industries and the public sector," says Lee. "It is also well established, having generated solid revenue and good margins since opening its doors in 1995."
Clearview employs more than 50 people in Auckland and Wellington and generates annual revenues in excess of $NZ5 million ($A4 million).
Westlake and Grey owned about 80 per cent of its shares between them, with the remainder held by two minority shareholders and the three senior staff, the beneficiaries of a fledgling staff shareholding program.
The purchase price has not been revealed.