Two Australian government accredited suppliers to the Department of Defence announced an intention to merge today.
Wireless and switch vendor The Longreach Group will merge directly with Allied Technologies, providers of secure voice, video and data and Web-based communications to the Department of Defence and other Australian federal government departments.
Michael Addison, Allied Technologies chairman, said the merger is well timed given the "huge multibillion dollar increases in the Australian Defence budget just announced".
"Both organizations have longstanding relationships with the Department of Defence, intelligence communities and security departments with products and services which are non competitive and in fact complementary," Addison said.
"The combination will lay the foundation for building Australia's first, ASX-listed mid-tier supplier of integrated ICT products, services and support directed principally at the defence, security and intelligence sectors in Australia and internationally."
Addison said the future of the combined company would come mainly through a series of "quality" acquisitions.
Under the terms of the merger Allied Technologies will acquire all issued shares in Longreach through offering one new Allied Technology share for every 2.5 Longreach shares held by Longreach's shareholders.
Based on a monthly weighted average share price of June 6, Allied Technology shares rated at 20 cents with Longreach at 6.31 cents, and on completion of the merger, current Longreach shareholders will hold an interest of about 57 percent of the merged company, which is still waiting Court approval and the approval of Longreach shareholders.
The merger is expected to be completed by September, 2006.
Michael Addison will retain the role of managing director of the merged company, while Longreach managing director Ken Carr will join the Allied Technologies board as executive director.