Hyro acquisition closes

By Allie Coyne on Jun 25, 2012 1:06 PM
Filed under Services

Long-running takeover talks complete.

Kit Digital’s acquisition of local digital services agency Hyro has officially closed, following months of stalled talks and speed bumps since the takeover first surfaced last December.

Kit Digital has officially taken control of the Hyro business spanning Australia, New Zealand and Thailand.

The business will continue to operate under the Hyro name for the next six months, and will remain listed as HYO on the ASX.

The sale price was not disclosed and neither Hyro nor Kit Digital responded to a request for comment by the time of publication.

Last month Hyro told shareholders Kit had offered $2 million in cash with the remaining $15.2m to be paid in 1,839,841 Kit shares.

Hyro’s share price dropped over 16 percent to $0.25 immediately following the announcement. 

A long road

The transaction has been fraught since talk of a Hyro takeover first surfaced in December last year, when the company reported receiving a formal purchase offer from a then-unknown suitor.

The deal was announced as being “imminent” when the Hyro board met on December 19, but discussions stalled when Kit Digital failed to formalise a purchase agreement, an oversight it attributed to an internal reshuffle within the company.

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The companies butted heads multiple times on price. In late April Kit offered $17 million or $0.60 a share, with the option to foot part of the bill with around 2 million of its own shares, worth $US8.57 at the time.

Kit’s shares in early May dropped to $US4.62, meaning Hyro could receive $A0.35 per share - just under half the original offer. 

Kit last month agreed to return nearer to the original price, offering $2 million in cash with the remaining $15.2m to be paid in 1,839,841 Kit shares. It also offered to increase the share price protection mechanism to $0.50, covering Hyro should Kit's share price once again plummet.

The acquisition will see Hyro and three of its subsidiaries absorbed into Kit Digital, an organisation with a market cap of over $US300 million servicing 2500 customers in 20 countries.

For its past fiscal year, ended December 31 2011, Kit Digital reported a net loss of $US25.4 million. That followed from a $US35.3 million net loss in 2010. 

Kit Digital CEO Kaleil Isaza Tuzman said when adjusted for several acquisitions including cloud video provider ioko, Kit had seen 33 percent growth and a revenue jump of over 102 percent to $US215 million.

Hyro currently counts 180 staff across five offices. It will form the largest of Kit Digital’s entities locally.

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