M&A, and growing the fintech sector

Resources Corner

The news this week is all mergers and acquisitions. The technology sector is always a hot bed of M&A action with small, agile firms so often scooped up in a reward for their innovative efforts.  
 
This week we’ve seen UXC acquire cyber security company Saltbush Group, Fairfax Media will buy AllHomes, Expedia Inc has been cleared to buyout Wotif.com and Telstra will acquire US based Ooyala. 
 
Economic news
 
The finance and technology sectors have seen a dramatic collision in the last decade and it’s the resulting ‘fintech’ sector that will drive growth in the financial sector in decades to come. 
 
A report by the Committee for Sydney has this week suggested that Sydney needs to ensure it doesn’t fall behind the global pack by ensuring it harnesses the innovative capabilities of fintech start-ups. 
 
“As Fintech will actually shape the future of Sydney’s key financial services industry and produce beneficial spill-over effects in other productive, tech-based sectors of our urban economy, this gap needs to be filled.” Says the committee chair, Lucy Turnbull.
 
The report analyses Sydney’s pros and cons in terms of attracting fintech talent and business – it acknowledges that Sydney still has a way to go.
 
“With tech entrepreneurs, this means that the eco-system and environment for innovation need to be attractive and supportive and also that the skills and finance they need are readily available. In this context this sector faces some critical challenges and barriers to overcome.”
 
Collaborating is cited as a key to this success.
 
“Assertive collaboration, skills development and capacity building are crucial to speeding up the maturing of Fintech firms and to realising a flourishing Fintech sector in Sydney.”
 
In an environment where start-ups are crying out for government assistance, it’s encouraging to hear the committee Chair suggesting the state government will step up to the plate.
 
“We are confident that our state government will seek to reduce any unnecessary barriers 
to the success of Sydney’s financial services and to the development of a successful Fintech sector.”
 
Mergers & acquisitions
 
UXC Limited (ASX:UXC) will acquire the cyber security company Saltbush Group. The IT and communications consulting company says the Saltbush Group has annual revenue of around $12 million and focuses on information and cyber security professional services. The company says the buy will offer strategic positioning in a growing sector with particular focus on the Federal Government market.
 
Fairfax Media Limited (ASX:FXJ) has tied up the purchase of Canberra based online property portal AllHomes. The media company announced the $50 million deal in July and scored regulatory approval from The Australian Competition and Consumer Commission (ACCC) in September.
 
Australia’s competition regulator has cleared US online travel giant Expedia Inc (NASDAQ:EXPE) to take over online travel booking company Wotif.com Holdings Limited’s (ASX:WTF). Expedia launched a $703 million takeover in July which was backed by Wotif’s directors but remains subject to shareholder approval and will be put to a vote next week. (9 Oct) 
 
Telstra Corporation Limited (ASX:TLS) has tied up the $US270 million, or $AUD308.8 million, acquisition of Silicon Valley-based video platform company Ooyala. Australia’s largest telco inked a deal in August to lift its interest in the video streaming and analytics business from 23 per cent to 98 per cent.
 
iSelect Limited (ASX:ISU) will acquire a 20.1 per cent stake in Intelligent Money Sdn. Bhd, a company which runs the iMoney website. The online comparison service says the deal is worth around $4.5 million and that iMoney attracts over 1.5 million unique visitors every month.
 
MOKO Social Media Limited (ASX:MKB, NASDAQ:MOKO) says it will acquire 80 per cent of Tagroom.com with a combination of cash and shares in MOKO. Tagroom is a news and entertainment service that publishes leisure content with the average user spending 11 minutes each day on the site.
 
Retrofitting 
 
Telstra Corporation Limited (ASX:TLS) has unveiled plans for free Wi-Fi at trial locations at payphone sites at some of Australia’s busiest and most iconic places.  The nation’s biggest telco says Australia’s largest Wi-Fi network is a step closer with the first 1,000 trial Wi-Fi hotspots going live before Christmas.