New Zealand-based Telecom Advanced Solutions is reportedly close to acquiring domestic rival Gen-I, in a deal that would create a new national champion with estimated revenue of NZD 300m ($184m). The New Zealand Herald stated that Gen-I’s main backer, Cullen Investments, has held talks with Telecom Advanced Solutions and Telstra-backed TelstraClear, and could raise as much as NZD 80m ($49m) through an auction.
Telecom Advanced Solutions is part of Telecom New Zealand Ltd, and IDC ranks the operation as the second largest IT/network service provider in New Zealand behind EDS Corp, ahead of Gen-I whose NZD 150m ($92m) revenue ranked it as the seventh largest player. Gen-I specializes in network and desktop management, systems integration and application development, and captured a NZD 50m ($30.6m), four-year outsourcing deal with insurance company IAG New Zealand last year.
In Australia, Perth-based IT services vendor ASG Group Ltd is looking to acquire companies based on the country’s east coast as it aims to boost its share of contracts with corporations and government agencies based in Sydney, Canberra and Melbourne.
ASG parted company with former backer Hewlett-Packard Co earlier this month, when the Palo Alto-based giant sold its 18% stake in the company for AUD 3.8m ($2.6m). ASG, which made sales of AUD 9.7m ($6.8m) in the six months to December 31, 2003, is aiming to acquire specialist service providers in the region to benefit from the growing demand for selective outsourcing services, rather than large, all-compassing outsourcing deals.
M&A activity is accelerating in Australia and New Zealand, as local vendors look to gain the mass they need to compete against larger, international rivals which have been attracted to the region’s outsourcing potential. In March, IBM acquired the New Zealand and Australian operations of network integrator Logicalis for NZD 101m ($62m), and in the largest deal announced in recent months, Telstra is in the process of acquiring Australia’s largest indigenous IT services vendor Kaz Group for AUD 333m ($255m).
