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SMS Management and Technology acquires The Birchman Group Asia Pacific for $25 million

Julia Talevski | Sept. 26, 2013
Involves an upfront payment of $12.5 million in cash and a further two payments based on profit performance.

ASX-listed system integrator, SMS Management and Technology (ASX:SMX) has acquired Perth-based IT consulting, integration and managed services provider, The Birchman Group Asia Pacific for $25 million.

The deal involves an upfront payment of $12.5 million in cash and a further two payments conditional on profit performance over a two year period.

According to SMS, Birchman is one of the largest accredited Microsoft partners in Western Australia and generates annualised revenues of about $32 million stemming from government, enterprise and resource sectors.

In Western Australia, Birchman has 200 staff and more than 30 per cent of their revenues come from application support, managed services and other multi-year agreements.

SMS CEO, Tom Stianos, said the acquisition accelerates its strategy to expand its business in Western Australia. Across Asia Pacific, SMS has more than 1500 staff.

"Birchman Asia Pacific has a talented management team operating with mature processes, development methodologies, and customer service culture. We are confident their business will grow strongly within SMS, and their customers will benefit from the extended Asia Pacific reach that SMS offers," Stianos said in a statement to the ASX.

Birchman Asia Pacific co-founders, Frank Early and Phil Thistlethwaite, said the acquisition was a strong vote of confidence within its business.

"We believe our clients will greatly benefit from the extensive range of services and geographic presence that our combined business can now offer," Early and Thistlethwaite stated. "With the support of SMS, we can address larger scale projects for our customers, positioning us well for expansion.

"We look forward to being part of the SMS team and growing the business in WA, in particular the opportunity to enhance the combined Microsoft capabilities to be one of their principal solution partners across Asia Pacific."

Birchman Asia Pacific is an alliance partner of Birchman Group in Europe, but it's not part of this acquisition.

The acquisition is subject to certain conditions and will be completed in October. SMS expects it to be earnings per share accretive in 2014 financial year.

In February Stianos indicated it was on the acquisition hunt to expand its geographic coverage and service offerings.


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