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Document management specialist Metrofile, is set to buy a local data storage company, in the group’s first corporate action since a deal for its own takeover by a US firm fell apart recently, as it adds to its growing digital effort.
On Thursday the provider of services for the storage, retrieval and dissemination of documents, among other things, said it had entered into an agreement to buy IronTree Internet Services.
IronTree provides data management services including cloud backup, disaster recovery and specialised server hosting in a private cloud. IronTree also offers cybercrime and ransomware prevention, ongoing privacy law compliance management and business continuity planning services.
Metrofile, which has been subject to two buyout offers of its own over the past two years, says the acquisition will help to boost its ongoing efforts to digitise its business.
The company said IronTree complements its “strategic pillar of accelerating its position into the provision of information management and digital services.” In addition, “this acquisition will benefit Metrofile’s clients who are managing their information digitally and will provide them with digital back up and hosting services that support their businesses.”
Metrofile — worth R1.4bn — also said IronTree will strengthen its capabilities in virtual storage and digital risk management, while giving it access to products in fast growing segments like cybersecurity and digital compliance.
That said, Metrofile has agreed to acquire 70% of the shares in and claims against IronTree from the founding shareholders with the remaining 30% to be purchased in 2024. Total consideration for IronTree will be for a minimum consideration of R80m and a maximum of R140m, the company said.
The transaction is subject to certain conditions being met, with shareholder consent not being required.
This deal comes just a short while after it was reported that takeover bids for Metrofile were now off the table.
When Covid-19 took hold of the global economy early in 2020, the group, headed by former SAP boss Pfungwa Serima, was in the midst of a takeover by US-based Housatonic Partners, which made an offer at the end of 2019. At R3.30 a share, that offer was at a 43% premium to its share price of R2.30 at the time. The stock has rallied since.
Another potential suitor also came sniffing around, but both deals have fallen away, leaving the company to continue making progress on its own.
In the year to end-February 2021, IronTree had revenue of R45.3m, profit after tax of R6.67m and net assets of R4.3m.
Shares in Metrofile — up 14% so far this year — ended the day 1.22% lower at R3.25.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.