Asta Transaction to Significantly Increase Revenue
Asta is an Information Communications Technology (ICT) company and has more than 200 clients, serviced by 85+ staff located in Melbourne, Sydney and Auckland. Asta has signi?cant expertise in a number of areas important to Tesserent's strategy, including cloud technologies, managed services and the development of blockchain applications.
The cost of the acquisition - 4 x FY18 EBITDA - is expected to result in a purchase price of $3.8 million, which will be met through a combination of shares and cash.
Analyst comment: this transaction is highly accretive, for a number of reasons, including the following.
Increased product offering - to date, Tesserent has focused solely on internet security as a service, but the acquisition of Asta will expand their product offerings to include web and mobile development, as well as cloud solutions and business consulting.
Increased client base - given Asta's 200+ clients throughout Australia and New Zealand, Tesserent's client base will expand accordingly. More importantly, the Asta acquisition enhances Tesserent's scope to encompass small- to medium-enterprise businesses (historically, the company dealt with larger corporations only), which should increase sales of Tesserent's Cyberbiz internet security platform.
Increased revenue - we believe the Tesserent group as a whole generated revenue of around $16 million over the past year (the valuation video above outlines how TSI determined this).
Valuation: we have increased our valuation for Tesserent to $0.26/share (currently $0.07), in the belief that, once the current share purchase plan closes on 6 August (a major overhang on the share price for the past 6 weeks), the takeover is complete (in October) and the new combined revenue is confirmed, the company's share price will re-rate towards our valuation.
To view the video, please visit:
About Tesserent Ltd
Tesserent Ltd (ASX:TNT) is a specialist in managed cyber security. Tesserent has built its own platform for the delivery of managed cyber-security, which it deploys for the management of its own customers and also licenses to partners around the world to enable them to deliver effective cyber-security management to their customers.
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