Dicker Data shares jumped over 4% on Monday bucking the wider Technology slump after the IT distribution announced it would acquire the Security and Information Technology distribution division of Hills Limited in Australia.
Headquartered in Lidcombe, NSW, Hills is the largest distributor of physical security products in the Australian market. Following the acquisition, Dicker Data will not only be the largest distributor in the segment but will be positioned to grow rapidly as the company leverages synergies gained from the Hills SIT division and capitalises on the market convergence occurring between security and IT.
The SIT division generated $123.2 million in revenue in FY21, with $98.7 million of the total attributed to security and the remaining $24.4 million to IT products.
The purchase price represents a premium to the net assets sold and the final amount is to be determined, albeit estimated to be in the range of $20 million.
Dicker Data and the Hills SIT division share only three mutual vendors, presenting an opportunity to novate agreements with over 50 net new vendors to Dicker Data, in line with the company’s growth strategy. The Hills SIT division is currently working with over 2,000 customers, 85% of whom are new to Dicker Data, which is expected to grow the company’s total active customer base to over 10,000 businesses across ANZ.
The acquisition will also accelerate the company’s entry into the physical security market and presents a significant opportunity to introduce the existing Hills SIT customer base to the wider range of technologies offered by Dicker Data. The physical security market has traditionally been serviced by an industry-specific group of businesses that are highly specialised.
Dicker Data also confirmed that the Directors of Hills will be unanimously recommending that shareholders vote in favour of the transaction.
Chairman and CEO, David Dicker, Dicker Data Limited said, “This will add an entirely new Business area to our company and introduce us to a wide range of new customers, as well as adding significant new revenue with the promise of significant expansion on that, going forward.”