Telstra share price higher on $400m cloud acquisition news

Telstra has its eyes on a cloud transformation comapny.

| More on:
Man happy to be holding a blue cloud representing cloud computing.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Telstra Group Ltd (ASX: TLS) share price is on the move on Friday.

In morning trade, the telco giant's shares have edged higher to $3.95.

Why is the Telstra share price rising?

Today's gain could have been driven by reports claiming that the company is about to make a major acquisition.

According to the AFR, Telstra is preparing to make a binding offer for Melbourne-based cloud transformation and consulting company, Versent.

Telstra is understood to have made the move after being outbid by French defence behemoth Thales for Tesserent Ltd (ASX: TNT).

The report suggests that Telstra would be paying upwards of $400 million to acquire Versent.

What would Telstra be acquiring?

Versent describes itself as a leading technology consultancy. It designs, builds and operates cloud-native applications, data streams, platforms, and services from offices across Australia, Singapore, and the United States.

It currently works with 40% of the companies listed on the ASX 100 index. This includes Transurban Group (ASX: TCL), Westpac Banking Corp (ASX: WBC), and Woodside Energy Group Ltd (ASX: WDS).

The AFR reports that the company, which was founded by former National Australia Bank Ltd (ASX: NAB) employees, has been growing at a compound annual growth rate of 35% over the last five years.

This leaves Versent's revenue sitting at $150 million currently, with management noting a clear pathway to $300 million in revenue over the next three years. This is expected to be driven by market share gains and an expansion into South-East Asia.

Telstra response

Telstra has responded to the report this morning and has confirmed that it is interested in acquiring Versent. However, it has suggested the $400 million price tag may be off the mark.

It commented:

Telstra confirms it is participating in the process. References to the value of the offer are speculative. There is no certainty a transaction involving Telstra will eventuate, should a transaction be finalised Telstra will update the market accordingly.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

Guess which ASX 200 mining stock is making a $276m UK acquisition

BHP failed in its UK takeover attempt but this mining stock is having more luck.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Mergers & Acquisitions

Guess which ASX 200 share just rocketed 15% on a $1.8 billion takeover offer

Investors are snapping up this ASX 200 share following confirmation of a takeover offer.

Read more »

Two CEOs shaking hands on a deal.
Mergers & Acquisitions

Guess which ASX All Ords stock is leaping 10% on a $1.3 billion bid

Deal accepted! This beaten-up stock is heading off the ASX.

Read more »

Two young male miners wearing red hardhats stand inside a mine and shake hands
Share Market News

Copper checkers: What's next for BHP shares after Anglo talks?

The miner's long term strategy hasn't changed.

Read more »

A woman holds up her hand in a stop gesture with a suspicious look on her face as a man sitting across from her at a cafe table offers her flowers.
Mergers & Acquisitions

BHP share price tumbles as $74 billion deal evaporates

BHP shares won’t be encompassing Anglo American’s copper assets after all.

Read more »

Three miners stand together at a mine site studying documents with equipment in the background
Materials Shares

BHP share price on watch after Anglo American takeover update

BHP is seeking an extension to its deadline to get a deal over the line.

Read more »

Miner looking at a tablet.
Mergers & Acquisitions

Should you buy BHP shares now before tonight's Anglo American takeover reveal?

ASX 200 investors should know tomorrow morning whether BHP will become the largest copper miner on Earth.

Read more »

Three miners looking at a tablet.
Mergers & Acquisitions

BHP share price marching higher amid fast approaching $75 billion takeover deadline

BHP is still in negotiations over its acquisition proposal for Anglo American.

Read more »