In a strategic move to boost its presence in the Aussie market, healthcare tech company Austco Healthcare (ASX:AHC) has revealed its intention to acquire Victorian-based Teknocorp Australia and its Victorian Monitoring Services division conditionally. The acquisition, valued at $3.8 million, marks a significant step for Austco attempting to replicate its direct sales model implemented in the United States, Canada, and Singapore.
Teknocorp, a long-standing Austco Nurse Call reseller for over two decades, is a provider of security and healthcare solutions. It specialises in Integrated Nurse Call (an Austco special), Security, Access Control, and related systems for the healthcare and various other sectors. Based in Victoria, Teknocorp primarily serves small and medium-scale enterprises in Melbourne, with a client base spanning healthcare, aged-care, maintenance, and construction sectors in both public and private domains.
Austco Healthcare CEO, Clayton Astles, said, “We are delighted to announce our intention to acquire Teknocorp’s business and assets, a move that represents an important step in Austco’s growth and expansion strategy in Australia. We are confident that Teknocorp’s expertise and reputation in the healthcare and security communications sectors, along with its strong customer relationships, will enhance our competitive position and create new opportunities for Austco Healthcare.”
This strategic acquisition aligns with Austco’s vision to establish a direct sales capability, expedite growth, and enhance its range of solutions to cater to the specific needs of the Australian healthcare market. The Company operates with direct sales capabilities in many regions; but in Australia, it follows a state by state reseller model. The addition of Teknocorp’s business, which includes over 300 customers, will further strengthen Austco’s operations. Key personnel from Teknocorp will be retained to facilitate a seamless transition for customers and employees.
Managing Director of Teknocorp, Robert Portelli, noted, “This merger opens doors to exciting opportunities and synergies that will benefit our valued customers and stakeholders. By joining forces, we are poised to deliver enhanced solutions, drive innovation, and make a significant impact in the industry.”
The acquisition is expected to generate significant revenue synergies by enabling cross-selling of products and services, as well as operational streamlining. The purchase price of $3,850,000 will be paid on a cash-free, debt-free basis. The payment structure comprises an upfront cash payment of $1.9 million, the issuance of Austco shares valued at $700k based on the 30-day volume-weighted average share price, and an anticipated earnout of $1,250,000 based on the annualized EBITDA of Teknocorp.
The completion of the acquisition is subject to various conditions, including voluntary escrow of Austco shares issued as part of the consideration, execution of executive services agreements with key employees, assignment of crucial customer and supplier contracts, regulatory consents and approvals, and finalization of financial and legal due diligence.
In a show of its direct selling capabilities, last week, the Australia-based company won a $3.8 million contract in Canada to install its nurse calling system, Tacera, at the new Maple View aged-care facility in Athens, Ontario.
Wins like these cement the Company’s decision to depart from the third-party seller model. The Teknocorp acquisition is expected to be finalised early in Q1 of FY24.
Alinda is a Business Reporter for The Sentiment
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