Spirit Technology Solutions boosts cyber security capabilities with $34.6m InfoTrust acquisition

Secure digital transformation provider Spirit Technology Solutions (ASX: ST1) has announced it will expand its cyber security offering through the $34.6 million acquisition of Australian company InfoTrust.

The deal will increase Spirit’s geographical presence across Australia and scale its cyber security division to become the largest business unit in the company and one of the larger businesses of its kind nationwide.

It is expected to strengthen Spirit’s relationships with key cyber security vendor partners and generate synergies of $1.4m in financial year 2025.

On completion of the deal, the combined cyber security group’s revenue will be around $65m, making Spirit a major player in that market.

Consideration for the InfoTrust acquisition will comprise $14m in cash, $14m in Spirit shares at 4.6 cents per share for a total 304.3m shares and $6.6m in deferred consideration to be paid in instalments at the six-month, 12-month and 18-month anniversary dates.

Under the terms of the acquisition, InfoTrust co-founders Simon McKay and Dane Meah will join the Spirit board.

Mr Meah is also chief executive officer of Spirit vendor partner MyCISO.

Acquisition funding

The acquisition and associated costs will be funded by a share placement to Spirit shareholder 263 Finance, which holds a 19.74% stake in the company.

The placement is expected to comprise 320m shares at 5c each to raise $16m.

Funding will also come from the issue of 304.3m Spirit shares to InfoTrust shareholders with an implied value of $14m and $6.6m in deferred consideration through a mix of combined group earnings and existing cash.

The scrip consideration and share placement will be subject to shareholder approval.

Expanding presence

Spirit managing director Julian Challingsworth said that increasing both its cyber security and geographic spread was a logical next step for Spirit and that InfoTrust provides the company with a highly complementary product and services suite to its existing product range.

“We are thrilled to be expanding our presence in the growing cyber security market and to be strengthening our position in the major markets of Sydney and Melbourne via this acquisition.”

“The deal gives us ownership of a leading Australian cyber-security firm, a company that has strong sales growth and profitability, a well-regarded CEO and a diverse suite of well-established and loyal clients.”

“It delivers on our strategy of growth via acquisition and our overall goal of becoming one of Australia’s leading providers of modern and secure digital workplaces,” he added.

Director appointment

In January, Spirit appointed businessman Shan Kanji as a non-executive director.

Mr Kanji has a track record in the managed services sector, having previously been a director of Atturra and its predecessor organisations.

He has over 20 years’ experience as a senior business leader of complex industrial and technology businesses in Australia and New Zealand and has worked with start-ups in technology, property development, manufacturing and other sectors.

Mr Kanji is a practicing lawyer and principal of legal firm Kanji & Co.

His associate company 263 Finance became a Spirit shareholder in December with an initial 15.9% stake that increased to 19.74% in January.