By ADAM GIFFORD
Australian listed firm Solution 6 Holdings is on the verge of buying legal practice software maker Keystone, a New Zealand-founded company listed on the London Stock Exchange.
Keystone informed the exchange in December about preliminary discussions on merging with some of the Solution 6 subsidiaries. It has since
told the exchange that those discussions "are progressing well".
Keystone Australia and New Zealand managing director Kay Sycamore said her company had proved that it could deal with large groups globally, but a merger with Solution 6 would give it more to offer customers.
"Technically, the market we both focus on - professional services organisations - is a wide market, and Solution 6 has a substantial and compelling product range for that market," Ms Sycamore said.
She said Solution 6 had built up a strong consulting organisation around the world which would help sell and implement Keystone Professional time-billing and practice management software, and the Net Results financial analysis product.
Keystone Professional competes against software from Solution 6 subsidiary CMS 6.
Merging with Keystone will give Solution 6 a listing on the London Stock Exchange and provide an extra £5 million ($17 million) for its cash reserves.
Product development is expected to remain in Auckland.
Ms Sycamore would not confirm Australian speculation that the deal would be done at $A1.14 ($1.40) a Solution 6 share. Solution 6 shares rose 10Ac to 70Ac on Friday.
In the September half-year, Keystone's turnover rose 40 per cent to £2.84 million. Its loss before tax and goodwill amortisation deteriorated 38 per cent to £1.90 million.
That loss reflected the costs of selling a system to London-based Clifford Chance, the world's largest law firm. Revenue from the sale, which could be more than $30 million, will not start flowing until the sale is completed.
Keystone software is used by six of the 10 largest New Zealand firms and several large Australian firms. It is making inroads into the British and United States markets.
Solution 6, which also owns Auckland accounting software company exo-net 6, made a net loss of $A136.1 million on revenue of $A283.6 million last financial year, after new chief executive Neil Gamble wrote down some of the acquisitions of his predecessor Chris Tyler.
Solution 6 expects positive earnings before interest, tax, depreciation and amortisation of $A25 million this year and revenue of $A340 million.
