Hyro hits hurdles in acquisition

Offer bounces back from 50 percent drop.

The saga between local digital services agency Hyro and would-be owner Kit Digital continues, with the former revealing to the market today that a third price is now on the table.

In late April Kit revealed it had offered to buy the Australian company for $17 million or $0.60 a share, pending shareholder approval.

The deal gave Kit Digital the option of footing part of the bill with around 2 million of its own shares, which were 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. 

Late last month Hyro told shareholders Kit had 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.

The company today announced Kit Digital had offered to increase the share price protection mechanism to $0.50, covering Hyro should Kit's share price once again plummet.

Hyro will hold its annual general meeting in two weeks time to canvass shareholder feedback.

Stalled talks

The transaction has been fraught ever 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.

The jewel in Hyro's crown is its Idaptive identity management software, which has seen it win deals with the likes of New Zealand’s Ministry of Education. Hyro’s Idaptive business was formally separated from the company in September last year as the board considered selling off the asset. 

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

Hyro currently counts 180 staff across five offices. It will form the largest of Kit Digital’s entities locally, including the recently-acquired cloud video provider ioko.