Wholesale telecommunications and cloud services provider Inabox Group Limited (ASX: IAB), has announced the acquirement of cloud services and hosting provider Hostworks for AU$7 million.

Founded in 1999, Sydney-based Hostworks provides managed hosting and operations in public and hybrid clouds, digital consulting, application development, and platform-as-a-service for live and on-demand media.

Inabox will be acquiring 100 percent of the shares of Hostworks and its associated companies from BAI communications. Under the terms of the deal, AU$5 million is to be paid up front, with the remaining AU$2 million to be paid in FY18 over an 18-month period.

The move is aimed at strengthening its cloud offering. The $7 million purchase of the digital media solutions business, sees Inabox yield strategic business synergies and cross-selling opportunities as the company gains access to Hostworks’ large enterprise customers such as Seek, Carsales, Ticketek, Foxtel, AHL and Seven Media.

Additionally, the deal will see Inabox leverage Hostworks’ cloud infrastructure along with its existing relationships with key vendors, spanning AWS, Microsoft Azure, IBM Softlayer and Google Cloud Platform.

Inabox said the acquisition of Hostworks will allow it to extend its own cloud-based offering and strengthen its position in the South Australian market given the acquired company also operates a 24/7 network operations center in Adelaide. Inabox CEO, Damian Kay said,

The acquisition of Hostworks fits firmly with Inabox’s vision to be a leading managed communications, cloud and IT services provider for SMEs and corporates as the demand for cloud-based services continues to grow. For most companies, investment into next-generation products and services remains necessary to stay at the forefront of an emerging market. Hostworks is a great company. It provides a strong offering of cloud-based products to a range of established blue-chip customers.

He also added,

More and more of the companies we work with are moving towards the cloud to reduce capital expenditure on infrastructure and take advantage of the convenience of cloud services, such as increased scalability and reduced maintenance costs. We don’t just want to cater for this trend – we want to be the best at it. That’s why we bought Hostworks.

According to Inabox, Hostworks is expected to contribute in excess of $3.5 million EBITDA in its first full year as part of the Inabox group.

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