Australia’s largest publicly-listed cybersecurity firm Tesserent (ASX: TNT) is set to strengthen its service offering to Federal Government agencies after signing a binding purchase agreement with Seer Security to acquire its businesses in Melbourne and Canberra.
Under the terms of the agreement, Tesserent will issue 76.9 million shares to Seer and make a $5 million cash payment split over three instalments – $2.5 million is due on completion of the transaction, $1.25 million due 13 months after completion, and the remaining $1.25 million to be paid after 25 months.
Adding Seer to the Tesserent stable will significantly expand the company’s cybersecurity capabilities, bringing a high-security focus on Australian Federal Government departments and agencies including defence and law enforcement.
The acquisition will be fully-funded through a $15 million debt facility established this week with Pure Asset Management to support earnings-accretive transactions.
Tesserent has previously acquired the interests of Canberra-based consulting firms Pure Security, Rivium and North BDT.
The completion of the Seer transaction will see it become the largest pure cybersecurity provider in the nation’s capital.
Seer has a strong operating history and will be immediately earnings and cash flow accretive to Tesserent, having achieved $7.6 million in revenue and $2.2 million in sustainable earnings for the 2020 financial year.
The firm’s financial position for 2021 is forecast to be strong and is underpinned by multiple locked-in contracts with Federal Government agencies.
Seer’s Canberra team will join with the North Security team on completion of the acquisition, while Seer’s Melbourne team will remain an independent organisation focused on enhancing its position in security software development.
Integration of the new team will be completed by end September.
Tesserent chairman Geoff Lord said the Seer acquisition was timely in light of the Federal Government’s recently-announced $1.35 billion Cyber Enhanced Situational Awareness and Response (CESAR) package – touted as the nation’s largest ever investment in cybersecurity.
The package aims to identify malicious cyber threats, disrupt foreign cyber criminals, and build partnerships with industry and government at a time when such crime is increasing in frequency, scale and sophistication.
“We are delighted to welcome Seer to the group, particularly in light of this package to combat foreign cyber threats to Australian sovereignty,” Mr Lord said.
“Current market conditions continue to present tremendous consolidation opportunities in the short to medium-term, and we fully expect to take advantage of this with additional acquisitions under consideration.”