Bulletproof cloud acquisition mired in legal fight over earn-out

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Bulletproof cloud acquisition mired in legal fight over earn-out

Bulletproof has hit back at what it called a "baseless" legal claim alleging the company mismanaged a New Zealand business it acquired last year in order to dodge earn-out payments of close to NZ$3.9 million (A$3.6 million).

ASX-listed hosting and cloud provider Bulletprood acquired New Zealand's Cloud House in January 2016 for NZ$1 million upfront. Cloud House also had the possibility of earning up to NZ$4.2 million if it achieved revenue and profit targets for the periods ending 31 December 2016, 30 June 2017 and 31 December 2017.

The acquisition formed Bulletproof's entire New Zealand business including a physical presence in Wellington and Auckland, and an expected NZ$3.5 million in annualised revenue.

Cloud House lodged a claim in the New Zealand High Court, alleging that it missed the first earn-out target because of Bulletproof's management decisions. The company also claims it was misled on Bulletproof's capabilities, customer base and access to managed services.

Cloud House said it lost close to NZ$3.9 million from potential earn-out payments.

Bulletproof called the claims "speculative and baseless" and said in a statement that it managed the New Zealand business in the best interests of the company.

Bulletproof also hinted that it would launch a counter claim "respect of Cloud House's financial position and projections in the course of the acquisition of the Cloud House business."  

"The board has taken legal advice, and considered the facts and matters raised in the claim. In light of that review and the board's assessment of the claim, the board considers it to be without merit and will vigorously defend the proceedings," Bulletproof said in a statement.

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