Dromana Estate (ASX:DMY) should trade higher after reporting that target company CloudCentral has signed a binding heads of agreement to acquire the intellectual property of US software company, DEY Storage Systems.
Dromana Estate had signed a binding term sheet to acquire CloudCentral on 20 March 2014.
Having completed due diligence earlier this month, Dromana and CloudCentral are both progressing the remaining conditions precedent with a view to completing the transaction in June this year.
The acquisition of DEY is subject to due diligence. If completed, it will introduce Software Defined Storage services to CloudCentral partners and develop new commercial opportunities.
This addition to CloudCentral's current storage offerings introduces the Software Defined Storage business model, which separates ownership of hardware and software, allowing customers a wider choice of software vendors.
CloudCentral builds and sells cloud computing infrastructure and solutions, along with offering maintenance and support services.
Its platforms and services are underpinned by strong intellectual property developed over four years, validated by live customer deployment and numerous Government grants and awards.
Following the proposed acquisition, CloudCentral has the potential to be the Software Defined Storage provider of choice for companies constrained by regulation from storing data offshore.
It is also likely to be the first Australian cloud provider to own its entire stack from end to end.
Keys to Dromana’s acquisition of CloudCentral include the appointment of CloudCentral founder Kristoffer Sheather to managing director, while former iiNet Director, Andrew Milner, will be a non-executive director.
Consideration is split between an initial issue of 275 million fully paid ordinary shares and additional shares to be issued upon achievement of performance milestones linked to revenue and EBITDA.
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