Melbourne IT Limited today announced it will acquire the assets of VeriSign's global Digital Brand Management Services (DBMS) business for US$50 million.
Effective May 1, 2008, the acquisition will significantly boost Melbourne IT's scale and market share in the digital brand protection and performance market.
In fact, the acquisition is expected to quadruple the current enterprise client base to more than 2,500 customers.
The VeriSign DBMS business and Melbourne IT's existing Corporate Brand Services division will be integrated to create a single, global brand services company.
The combined business, which will help enterprise clients to manage, monitor, protect and optimise the performance of their digital brands, will have more than 200 staff in 14 offices across the Americas, Europe and Asia Pacific.
Melbourne IT CEO and managing director, Teho Hnarakis, said the importance of the Internet as a medium for business, communications and marketing will continue to develop with digital brands forming the cornerstone of e-commerce transactions.
Speaking at a media briefing earlier today, he said this acquisition boosts the company into the number one position in the global market.
"We have seen some consolidation in this arena in the past 12 months and we wanted to decisively position Melbourne IT as the leading global provider in this field," Hnarakis said.
"Melbourne IT already has a market leadership position in this space in the Asia Pacific region and Europe.
"The acquisition of VeriSign DBMS is expected to quadruple our client base, provide a leading market position in the Americas and deliver a 200 per cent increase in the number of digital brands managed on behalf of our clients."
Hnarakis said trends driving growth in the digital brand protection market include online advertising, search engine marketing and e-commerce, which experienced growth in excess of 20 per cent in 2007.
At the same time that the market is booming, he said the vulnerability of these brands to malicious attack is escalating.
"In 2007, the incidence of cybersquatting increased 18 per cent and more than US$3.2 billion extorted by phishing scams in the US alone," Hnarakis said.
Following the acquisition the new division will be renamed Melbourne IT Digital Brand Services.
The deal will be funded by a US dollar denominated credit line with the National Australia Bank and is expected to be EPS accretive in 2009.
The purchase price of US$50 million represents a multiple of less than 10 times EBITDA for the 12 months to March 31, 2008.
VeriSign senior vice president of strategic development, Russell Lewis, said the sale of its DBMS business is part of a strategic effort to focus on the company's core strengths in Internet infrastructure.