Hyro makes acquisition, changes name

By Allie Coyne on Sep 10, 2012 12:12 PM
Filed under Services

Gary Cohen on board to restore shareholder faith.

Digital services agency Hyro plans to buy almost half of multinational information technology company Global Group Australia just months after Hyro itself was taken over by a larger global rival.

Hyro today told its investors it would spend $1.76 million for 40 percent of Global Group’s business, to be paid in 4.76 million Hyro shares, at $0.37 per share, pending shareholder approval.

Hyro will also subscribe to a $2 million convertible note facility to Global Group, to be redeemed on the third anniversary of issue, which would bring Hyro’s ownership of Global Group to 58.6 percent.

Under the proposed deal, Hyro will acquirethe Global Group businesses Social Loot, online sporting event registration system Global Entries Online, digital solutions agency Global Internet Technologies Australia and 40 percent of recruitment management system Recruitment Adviser. 

Brothers and former iSoft execs Gary and Brian Cohen will be appointed to the Global board of directors, while Global IT CEO Gary Munitz and COO Danny Sekers will continue in their current roles.

The Cohen brothers joined Hyro in July, Gary as chairman and Brian as CTO. Cohen replaced former chairman Robert Clarke, who resigned as part of the Global initiative which first arose in June.

Upon joining Hyro, Cohen attempted to derail the Kit Digital transaction due to what he said was an undervaluing of Hyro.

“About four or five years ago the company had a market cap of about $400 million and has destroyed that down to about $10 million today . . . the current board and management team have overseen shareholder value destruction of significant proportions,” Cohen told the AFR in June.

“It is in the middle of the internet world, which is one of the hottest spaces to be, yet Hyro has become a services player with very small margins.

The Global deal is expected to be completed by mid-next month.

“The Global Group acquisition will be the first transaction for the company in building a new portfolio of investments in information technology businesses,” Cohen told investors today.

“The acquisition will expose the company to a range of business operations in the digital media and social media operations utilising the skills of a strong and experienced management scheme.”

New name

Hyro will also propose a name change to its shareholders on its 11 October general meeting, as required under the June acquisition by Kit Digital. Hyro’s investors will vote on the proposed change to Invigor Group Limited.

According to Hyro, “invigor” means to give life and energy and is appropriate given the company’s future direction.

“We believe the new name resonates with the emphasis we have on creating value for shareholders by investing in innovative technology,” the company said in a statement.

Hyro's takeover talks with Kit Digital stalled repeatedly since first coming to light in late 2011, due mostly to an almost 50 percent drop in Kit’s share price last May to $US4.62 in just a month.

The reduced share price revalued the offer for Hyro at just $A0.35 a share, compared to Kit’s initial bid of $17 million or $0.60 a share, with the option to foot part of the bill with around 2 million of its own shares.

The acquisition closed in June for a total value of $14.3 million with $2 million in cash.

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

 
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