Reckon buys into Melbourne IT

Reckon Limited (ASX:RKN) has bought nearly five per cent of Melbourne IT (ASX:MLB) for $7.3 million, and said it considers the digital services company to be a potentially significant business partner

Reckon Limited (ASX:RKN) has paid $7.3 million to acquire a 4.97 per cent stake in Melbourne IT Limited (ASX:MLB).

Reckon, which provides financial management software, said it would seek to establish a commercial partnership with Melbourne IT.

But the company added it currently has no plans to increase its stake in Melbourne IT any further, or to mount a takeover offer for the company.

Melbourne IT provides domain names, hosting and other digital products and services. The company reported a net profit of $16 million in calendar 2010, but this was down 4.5 per cent on the prior year due to expenses accrued from a project to expand into integrated web services.

In a market update, Reckon said it had funded the share purchase using existing cash reserves and debt facilities.

The company added that it considers the investment to be “a strategic investment in a potentially significant business partner.”

Reckon's own 2010 profit grew 27 per cent to $17.2 million, from six per cent higher revenue of $90.1 million.

MLB shares grew 4.68 per cent on Wednesday to $1.900, while RKN declined 2.59 per cent to $2.630.

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