The Dicker Data Ltd (ASX: DDR) share price is pushing higher today following the company's acquisition announcement.
During early afternoon trade, the IT distributor's shares are exchanging hands for $14.60, up 1.39%.
In comparison, the S&P/ASX 200 Index (ASX: XJO) is hovering around 7,230 points, up 0.12% for the day.
Dicker Data moves to takeover Hills' Security and IT division
Investors are bidding up the Dicker Data share price following the latest announcement by the company.
According to its release, Dicker Data advised it has entered into a conditional business sale agreement with ASX-listed Hills Ltd (ASX: HIL).
Under the deal, Dicker Data acquired the Security and Information Technology (SIT) distribution division of Hills for around $20 million.
Dicker Data stated that the purchase price represents a premium to the net assets sold. Thus, the final amount is largely dependent upon inventory-related balances at the completion date.
Headquartered in New South Wales, Hills is the largest distributor of physical security products in the Australian market.
In FY21, the SIT division generated $123.2 million in revenue, comprising $98.7 million to security and $24.4 million to IT products.
Once the acquisition is finalised, Dicker Data will be the leading distributor in the SIT space. This will see the company gain not only the business but inventory, customer and vendor relationships, employees, along with other net assets of the business.
Notably, the Hills SIT division currently has over 2,000 customers, of which 85% are new to Dicker Data. This is expected to grow the company's total active customer base to more than 10,000 businesses across Australia and New Zealand.
The proposed acquisition is subject to Hills shareholder approval, which will be at a general meeting sometime in April 2022.
What did management say?
Dicker Data chair and CEO, David Dicker commented:
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.
Ultimately, we have determined that a change of ownership to an organisation with strong capability in technology distribution and solutions, is in the best interests of the Hills shareholders and the future success of the SIT division, its people, suppliers and customers.
Despite being flat in 2022, the Dicker Data share price has risen by almost 30% since this time last year.
