One of the country’s biggest business software,hardware and services providers is about to get even bigger. After the market closed Thursday, Softchoice Corp. announced it will buy Unis Lumin for $17 million in cash.
Unis Lumin is an Oakville, Ont. based solution provider with offices across Canada with strong business around managed services and as a Cisco Systems Inc. networking partner. Computer Dealer News (CDN) ranks Softchoice as Canada’s biggest solution provider, while Unis Lumin was 22nd on the list.
Softchoice CEO David MacDonald said the acquisition would dramatically change the profile of his company in the marketplace. “The acquisition of Unis Lumin significantly enhances our services capabilities. About half of Unis Lumin’s business was professional services and they had an excellent reputation in the market place and it will strengthen our own services portfolio going forward. We have tried to grow our professional services organically and have found some success but this deal really catapults us,” MacDonald said.
Unis Lumin also has a strong networking business and managed service called Keystone, which MacDonald believes will bring a reoccurring revenue stream to Softchoice. MacDonald said that Unis Lumin has 50 people dedicated to its professional services division coupled with its managed services business and working with Softchoice sales reps would multiple his company’s capabilities.
The word on the street is that Softchoice acquired Unis Lumin because of the Keystone managed services arm, an area that was still a gap the company needed to fill. However, MacDonald dismissed that, saying the primary reason for the deal is to acquire Unis Lumin’s professional services business. He also wants Unis Lumin’s networking prowess, especially with Cisco UCS. Third in priority is the company’s managed services arm.
MacDonald did acknowledge that acquiring Unis Lumin, one of Cisco’s top channel partners in Canada, would mean more opportunity to build on its UCS business, along with video, collaboration and borderless networks; three top Cisco market opportunities.
“We felt Unis Lumin’s UCS business would further ours and would build upon it and make us one of the biggest UCS players in Canada and would helps get strong in data centres and virtualization as well,” MacDonald said.
As for Unis Lumin’s leadership, company Dale Bristow has agreed to stay on with Softchice. Company founders John Breakey and Morro Lollo will help with the integration but would be leaving shortly after, MacDonald said.
Softchoice has offered every Unis Lumin employee a role in the merged company and MacDonald is hopefull all will stay on.
As for the sale price of $17 million, MacDonald dismissed the notion that it was low considering Unis Lumin takes in $74 million in revenue. He said the purchase price is based on earnings and he believes it was a fair price based on industry comparables.“This is a good deal for both sides and certain not a bargain and I feel really good about it,” MacDonald added.
Softchoice is a leading solution provider in Canada, MacDonald said, and with Unis Lumin’s offices from Halifax to Vancouver it will help with the company’s footprint. He hopes to leverage the company’s professional services group along with its new Keystone managed services to help it grow in the U.S. as well.
Besides boosting its professional services capabilities, Softchoice believes Unis Lumin can provide the technology foundation to support future cloud offerings.
The transaction is subject to approval by the federal Competition Bureau and is expected to close before the end of 2011.
Paul Edwards, director of research for London, Ont.-based Info-Tech Research Group’s vendor research team, said this acquisition makes a lot of sense for Softchoice. “Unis Lumin has a good services element to its business, something that Softchoice is trying to build in their own business,” he said. “Obviously, there’s a cloud based opportunity out there in the market that Softchoice sees and they’re interested in leveraging what Unis Lumin brings to the table there. I think they’re going to be able to benefit from the skill set that Unis Lumin has in being able to build private cloud.” Edwards sees Softchoice continue to build its managed services and cloud offerings.
“As a high-growth company we’ve been in the fortunate position to be selective about finding the organization that would provide the right focus and resources to build on our work and value to customers,” said John Breakey, CEO of Unis Lumin. “Softchoice more than met our criteria for continued success – above all, a strong culture and focus on people.”
While the deal involves two gold level Cisco channel partners, Mike Ansley, Cisco channel chief, welcomed it. He sees this as Softchoice broadening its certification base and talent pool.
“The capabilities of the joint company will increase and we will be working with them on both fronts for UCS and video,” Ansley said. He added that this deal does not mean there will be a gap in the market now that a loyal Cisco partner such as Unis Lumin joins a multi-vendor solution provider. “I see this as a net positive for customers in the market place and I do not consider the need to replace Unis Lumin,” Ansley said.
Cisco Canada’s channel team is used to working with multi-vendor solution providers and Ansley said that the company’s R&D creates compelling technology that draws in the multi-vendor solution provider especially recently with data centres and with UCS and Nexus. Cisco annually spends $5.3 billion in research and development.
“I am personally thrilled for John Breakey and Morro Lollo and the Unis Lumin team. They created value in business and they brought exceptional expertise to the market place. Softchoice is buying a great asset and it helps them diversify their own business and I welcome it and expect to have a deeper relationship with them,” Ansley said.