Aussies snap up CodeBlue in potential $15 million deal

Auckland-based national IT services company CodeBlue has been snapped up by Australia's CSG in a deal worth up to $15 million.

The deal will see CSG paying NZ$5 million in cash, with an additional NZ2.7 million in contingent cash payments and further earn out considerations capped at a total acquisition sum of NZ$15 million.

CodeBlue's management team will remain in place, CSG says.

Julie-Ann Kerin, CSG chief executive, says there is a natural fit between CodeBlue and CSG and the acquisition provides an attractive platform to support the CSG strategy in Australia and New Zealand.

CodeBlue specialises in the 30-300 seat market, and has 160 staff and managed IT contracts with more than 350 customers across New Zealand.

CSG meanwhile has a footprint across Australia and New Zealand with offices in every capital city and a national service network supporting more than 15,000 customers. Earlier this week, the company reported revenue in excess of AU$220 million for FY15.

CSG aims to deliver 'one bill, one partner, one cloud' services, covering managed technology, print and cloud solutions, sold as a service that are suitable for small to medium enterprise but also scale to meet the needs of larger enterprises.

Kerin says CodeBlue enhances CSG's expertise in delivering IT support to small and medium enterprise customers.

CodeBlue is expected to provide the ongoing support service delivery unit for CSG technology customers across Australia and New Zealand, leveraging its 'sophisticated IT service desk and remote support and monitoring platform to provide the ongoing support service delivery for CSG technology customers…

CSG says CodeBlue customers will also benefit from the deal, gaining access to CSG's broad range of technology solutions.

From FY16 customers will be able to source print, unified communications, desktop, display, IT infrastructure, data storage and backup all as a service, supported by CodeBlue.

"The value proposition is that customers will be able to source multiple products and solutions from one partner, with one simple monthly bill and get access to the latest state-of-the-art technologies for minimal capital outlay," Kerin says.

Chris Mackay, CodeBlue chief executive, says by becoming part of CSG, CodeBlue 'will be even better positioned to execute on its vision of providing enterprise-strength nationwide IT service and support to companies with up to around 300 seats'.

"We believe the new ownership structure and underpinning strategy will enable us to deliver even greater value to our customers through offering complementary solutions that can meet all of their technology needs," Mackay says.

CSG has just completed an AU$30 million institutional share placement for new capital with the company forecasting a 'more than 14%' growth in revenue and 13% to 25% growth in EBITDA for FY16.

Earlier this month, CodeBlue itself was on the acquisition trail, buying up Wellington IT services company XWL.