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Dicker Data to acquire Hills security and IT division

By Ryan Morris-Reade
Tue 22 Feb 2022

Dicker Data has announced it has entered into a conditional business sale agreement (BSA) to acquire the Security and Information Technology (SIT) distribution division of Hills Limited in Australia.

Hills is headquartered in Lidcombe, NSW, and is the largest distributor of physical security products in the Australian market. 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. 

Dicker Data will be the largest distributor in the segment following the acquisition. The company will be positioned to multiply as it leverages synergies gained from the Hills SIT division and capitalises on the market convergence occurring between security and IT.

Under the terms of the BSA, Dicker Data will acquire the SIT business for cash consideration structured as a partial Net Asset sale. And upon completion, Dicker Data will acquire the business, inventory, customer and vendor relationships, employees and their entitlement obligations, and certain other net assets of the Hills SIT division. 

The company says the purchase price represents a premium to the net assets sold, and the final amount is mainly dependent upon inventory-related balances at the completion date. The price is estimated to be in the range of $20 million.

Dicker Data and the Hills SIT division share only three mutual vendors, which presents 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 accelerate its entry into the physical security market and presents a significant opportunity to introduce the existing Hills SIT customer base.

"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," says Dicker Data chairman and CEO, David Dicker.

Dicker Data will transition 130 Hills team members and assume responsibility for a nationwide network of seven trade centres under the agreement. A new physical security business unit will be created at Dicker Data. Chris Price will lead this, who re-joined the Company in January 2022 as general manager of Physical Security. 

Price is the former commercial director of Dicker Data, having worked for the company between 2006 and 2014. He has since held director-level roles with other technology companies, including HP.

Like the professional AV and electrical trade markets, the physical security segment is converging with the IT market as IoT, AI, smart devices, and cloud solutions become critical elements of best-practice security solutions.

"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," says Hills CEO, David Clarke.

The proposed acquisition is subject to Hills shareholder approval, which will be sought at a general meeting of shareholders, expected to be held in early April 2022, and an Independent Expert concluding that the proposed transaction is 'fair and reasonable' to Hills shareholders. 

Other key conditions include:

  • Consent from crucial suppliers and landlords of the SIT division to novate existing contracts to Dicker Data.
  • Commonwealth Bank of Australia agreement to loan facilities and security over the assets sold.
  • No material adverse change occurring in the SIT division between the date of the sale agreement and transaction completion.
     
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