Advantage Group's $15 million acquisition of oil industry software firm PEC Retail Solutions will extend the group's geographic coverage to 14 countries, says CEO Greg Cross.
Cross says the acquisition will more than double the Eftpos system developer and distributor's earnings, and result in a combined operation of more than 120 software developers. He believes the purchase will achieve four strategic objectives for Advantage including expansion of its geographical presence.
"Advantage already has a major presence in the Australasian oil
industry and recently concluded an agreement to supply payment solutions to Caltex in South East Asia," he says. "Thanks to PEC's success in top-tier service station sites throughout the southern hemisphere we now have an even stronger presence in the oil industry.
"It also extends Advantage's market share in Eftpos with PEC's Eftpos in Pumps installed in service stations throughout New Zealand. The acquisition also gives us the opportunity to sell our transaction processing solution to PEC's international customers. We can provide a more comprehensive solution and further streamline their IT procurement."
The purchase is Advantage's second multi-million dollar purchase in a month. In May the company announced the purchase of retail hardware company Computer Enhancements for $9 million.
Marton-based PEC Retail Solutions is being bought from agricultural equipment company Gallagher Group. Hamilton-based Gallagher Group, which manufactures and markets power fencing systems, recently bought PEC New Zealand for its Cardax building access system and is on-selling the Retail Solutions division.
PEC Retail Solutions has 120 staff - 80% of whom are software developers - and revenue of $28 million for 1999. It sells software to Shell, Caltex and BP in New Zealand, Australia, South America, South Africa and South East Asia.
PEC will be merged into a business unit which sells software-based point-of-sale solutions to retail customers worldwide.
PEC is also about to release and upgrade to its retail automation package. The Windows NT-based system, which includes point of sale at the front end and browser-based technology at the back office, is aimed at the supermarket and hospitality sectors as well as the oil industry.
Advantage has two other business units: point-of-sale equipment (which has been boosted by the acquisition of Computer Enhancements and includes Hypercom Eftpos terminals and Symbol barcoding and scanning equipment) and electronic commerce transaction processing including Advantage Transaction Exchange and its Internet-based payments processing engine, Advantage Transaction Server (ATS) for NT or Unix.
Advantage has been working closely with Microsoft New Zealand, which used Advantage APIs to write a plug-in for its own Site Server product to automatically enable ATS-based credit card transactions.
As the Advantage Group is listed on the New Zealand stock exchange, the agreement is subject to shareholder approval. The group is also 14% owned by Blue Star head Eric Watson.
Advantage's purchases of PEC and Computer Enhancements will be funded out of cash reserves and trading profits, with a small amount of bank debt.
Advantage reported a $1.4 million profit in the March quarter compared with a $1.6 million loss for the corresponding quarter last year. The company is expecting full-year earnings of more than $3 million, compared with last year's $8.1 million loss which bore restructuring costs.