GBST and OMX Technology Australia Pty Ltd (“OMX”) have today announced that an agreement has been executed for the acquisition by GBST of the Palion broking business for AUD$5.1 million. The acquisition is expected to complete by mid-December, subject to various conditions.
GBST Chief Executive Officer, Mr Stephen Lake said “There is a logical fit between the GBST and Palion solutions and this acquisition represents a significant step forward in our strategy to expand our product suite and provide our clients with a more streamlined system of processing both their equity and derivatives transactions. The customer feedback since we announced our intentions has been overwhelmingly positive. We have many mutual customers who are looking forward to a unified solution and we believe this offering will benefit this industry as a whole”.
The Palion business was acquired by OMX in 2004. The divestment of the Palion business in Australia is consistent with the global plan announced by OMX to sharpen its focus on marketplaces (exchanges, clearing organisations and central securities depositories).
The Palion product suite includes ‘DCA’, the leading client accounting system for options trading in Australia. This product is currently used by approximately 60% of brokers trading ASX listed equity options. Other software products recently developed by the Palion team include a trade order management system and risk management system.
The agreement includes GBST assuming full responsibility for the existing Palion customer base along with the staff members currently employed in the business. “We are very pleased to have the highly skilled Palion team joining GBST to continue their support and development activities. The Palion and GBST technical staff come from similar cultural backgrounds, and we are excited by the prospect of combining the talents of these technically excellent people.” commented Mr Lake.
The acquisition is expected to make an immediate positive contribution to cash flow and EBITDA however the impact on earnings per share to 30 June 2006 is expected to be neutral due to premises relocation expenses and amortisation of acquired software. The Directors of GBST expect the integrated business to make a strong contribution to EBITDA and EPS in its first full year.