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Zeacom sold to Canadian buyer for $38m

Zeacom sells to a Canadian buyer for $30 million. UPDATED with rebuttal from Zeacom founder Miles Valentine.

Sat, 02 Jun 2012

Telephony software maker Zeacom has been sold to Canada's Enghouse Systems for $US30 million ($NZ38 million).

Zeacom says its fiscal 2012 revenue was $US29 million.

Founder and CEO Miles Valentine would not give specific numbers, but Friday afternoon he told NBR ONLINE the company, which he founded in 1994, "Is nicely profitable and has been for years."

A sale to offshore buyers can mean disappearing local jobs, whatever promises are initially made (Navman's consumer business being a classic example).

Asked if Enghouse would keep Zeacom's Auckland team intact, Mr Miles replied:

"Yes. Absolutely a full staff contingent will stay in New Zealand."

There have been two "peripheral redundancies" from a staff of 90, but overall " Enghouse see New Zealand as a very company-friendly work environment, with good levels of expertise. Our Development team are a specific reason they purchased us. They are especially interested in our Microsoft Lync work and products/focus." (Lync is Microsoft's product for unifying all forms of communications - including mobile, landline, txt, email - into a single system).

Mr Valentine himself will stay on, becoming an Enghouse regional vice president.

Offshore investment can help a New Zealand-founded company expand globally and increase the number of local jobs.

But the annoying thing here is that, again, we're looking at a company that's received millions in government grants - which a North American owner will now benefit from.

Right Hemisphere, which received an interest-free loan of more than $10 million among other government backing, is another prime example. It is now owned by Germany's SAP. 

For now, that's a good news story. Right Hemisphere is expanding and SAP NZ country manager Graeme Riley tells me his company will its new acquisition reach new markets and expand into new areas.

That's good. But something about this sticks in my craw.

Mr Valentine, naturally, has a different view.

"The MSI [Ministry of Science and Innovation] grant is a positive, and with that in mind, I expect there will be ongoing growth in the New Zealand team."

(Whatever the politics of the situation, there's no doubt Mr Valentine has worked hard for his money. A couple of years back I talked to him about his everyday work regime as split his time between Auckland and LA - and two different office drinking cultures. Check it out here.)

RAW DATA: Enghouse announcement

Enghouse Systems Limited (TSX:ESL) announced today that it has acquired Zeacom Group Limited for a purchase price of US$30.6 million, subject to certain price adjustments. Zeacom’s annual revenues for fiscal 2012 were approximately US$29 million.

Headquartered in Auckland, New Zealand, Zeacom’s leading edge contact center software and business process automation solutions have been installed in over 3,500 customer sites worldwide.

The Zeacom Contact Center product is a full multi-media product offering a cloud, hosted or on-premise solution. It is primarily targeted at the SMB contact center market and distributed through an extensive telephony reseller channel.

Zeacom’s recently released new products are also well positioned to meet the growing need for software-centric solutions. Zeacom has operations in New Zealand, Australia, the United States and the United Kingdom.

“We are excited about the acquisition of Zeacom,” stated Stephen Sadler, chairman and CEO of Enghouse.

“Zeacom presents us with a great opportunity to address the SMB space more effectively, extend our reach into new geographies and further position Enghouse to meet the evolving needs of our current and future customers.”

“We are very pleased to be joining Enghouse – a well established, global provider of management interaction solutions,” stated Miles Valentine, CEO of Zeacom.

“In a consolidating and evolving market, scale and resources matter and with Enghouse, we found the perfect partner to take advantage of the market opportunities ahead of us.”

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Zeacom sold to Canadian buyer for $38m