The Rhipe Ltd (ASX: RHP) share price is up in early trade after announcing an acquisition to the market.
Rhipe describes itself as Asia Pacific’s leading cloud channel company providing technology partners with complete end-to-end cloud solutions and helping them grow and thrive in the Cloud economy. It has a vendor portfolio which includes Microsoft, VMWare, Citrix, Veeam, DocuSign and others.
Rhipe’s Ripe Acquisition
Rhipe has entered into a binding agreement to acquire Network2Share.
Network2Share is an Australian based security company that has developed a user-friendly encryption product called SmartEncrypt which Rhipe plans to bundle with Microsoft Office 365, Microsoft Azure and other vendor software licenses.
The idea of SmartEncrypt is that it allows companies to “easily” encrypt files and documents en masse using simple encryption keys. Rhipe said that even if a network is breached by an unauthorised user, the files that they gain access to will be unreadable and unusable.
Rhipe was attracted to the idea of the acquisition because it will provide a new and differentiated exclusively intellectual property for Asia Pacific.
Rhipe has market-tested the SmartEncrypt capabilities with a number of its key resellers and has received strong interest for small and medium sized end-user businesses.
The acquisition for the company, which is currently pre-revenue, is limited to $2 million in cash which will be used to repay the owners’ debt which was accumulated to develop the SmartEncrypt product.
Three tranches of $1 million each will be payable on sales of 10,000, 20,000 and 40,000 month licences. The total of $3 million will be split between $1.75 million of cash and $1.25 million of Rhipe shares.
Rhipe intends to invest further in the development of SmartEncrypt after the acquisition is finalised , although this doesn’t affect its previously stated operating profit guidance of $16 million for FY20.
This sounds like a good bolt-on acquisition for Rhipe, although I don’t know enough about Rhipe yet to know how much of a game changer (or not) this is. At the moment I’d find it easier to invest in the reliable shares in the free report below instead.
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