TelstraClear has bought professional services company Sytec Resources and a 100% owned subsidiary, DMZGlobal, for $12 million to boost its ICT capability in New Zealand.
Sytec, which was established in 1987, is a consulting and outsourcing business employing more then 140 staff in New Zealand, Australia and England.
TelstraClear chief executive Rosemary Howard says the telco intends to be a serious contender in the New Zealand ICT market, forecast to reach $2.16 billion during 2004, increasing to $2.76 billion by 2008.
"This purchase enables us to deliver full end-to-end ICT solutions to New Zealand and trans-Tasman business customers from the advisory and consulting phase, through to the delivery and management phase.”
She says TelstraClear selected Sytec because of its strong strategic and IP technology alignment with TelstraClear.
Sytec’s customer portfolio includes BP, Corrections and the New Zealand Lotteries Commission.
"The acquisition strengthens our ability to leverage our trans-Tasman relationship with Telstra for customers such as BNZ and Qantas," says Howard.
She says Sytec will continue to operate as a stand-alone business and retain its executive team. There will be no staff changes.
The transaction is cash flow positive in year one, EPS (earnings per share) accretive in year two and will generate a return in excess of Telstra's WACC (weighted average cost of capital) in the 2006 financial year.
The acquisition price represents an EBITDA multiple of approximately five times Sytec's latest management forecasts. The agreement includes a number of milestones for the parties to meet.