Synergy to buy managed services provider C&PA

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Synergy to buy managed services provider C&PA

Synergy Plus today announced its intention to acquire South Australian IT service provider C&PA.

The agreement was expected to be finalised next week for a purchase price of 1,000,000 Synergy Plus shares upon settlement, and a further 500,000 shares on 2 January 2011.

C&PA provides infrastructure design, consulting, product supply, system implementation and infrastructure managed services to customers in the banking, legal, accounting and education sectors.

It was established in 1992 and has vendor relationships with HP, Microsoft, IBM, Lenovo, Toshiba, Canon, LG, Ergotron, Trend Micro, and VMWare.

The Synergy Plus shares would be distributed among C&PA's four directors and seven shareholders, including its finance director Michael Owston.

Owston told CRN that the deal followed three months of negotiation. Previously, C&PA also had been in discussions with ComputerCorp (rebranded Synergy Plus last year), but that deal fell through.

"We as an organisation had plateaued, and were finding it quite difficult to grow," Owston said. "It certainly hurt our business when the [South Australian] government moved away from the reseller channel three years ago."

All of C&PA's engineering and sales personnel were expected to move to Synergy Plus, leaving a third of its staff -- including administrative personnel and its CEO -- to be made redundant.

Synergy Plus's CEO Garry Henley said settlement would coincide with the company's move to a new, larger office in Adelaide next week, which would feature a small data centre and provide it with "room for growth".

Henley told CRN that Synergy Plus hoped to grow and integrate the infrastructure business with its traditional mid-range IBM business.

"What this particular deal did was bulk up on our infrastructure side," he said. "We wanted to add some bulk to the business and economies of scale."

C&PA would be the fifth acquisition by the company in the past two years, following the acquisitions of Coretech and Paragon in 2008, its namesake Synergy Plus last year, and Leading Solutions recently.

Hinting at upcoming acquisitions in Sydney and Melbourne, Henley said: "We're constantly on the lookout for opportunities."

"We're starting to move Synergy from its traditional hardware focus to grow its services business, and leverage partnerships with HP and IBM."

ASX-listed Synergy Plus was valued at 4.2 cents per share when the market closed yesterday, putting the value of the deal at approximately $69,000, although shares would be issued using the weighted average share price for five trading days before settlement.

Henley said the shares were undervalued, considering the $1.6 million profit Synergy Plus reported for the second half of 2009.

"Our share price is low because the business was a little shaky in previous years," he told CRN. "We're all about building the confidence and value back up."

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