Atlassian said to plan $3bn IPO

Some major deals are in the offing within Australia’s ICT sector, with software development and collaboration tool provider Atlassian planning a multibillion-dollar IPO as telecom providers Vocus and M2 agree on a $3 billion merger.

Atlassian has filed papers for a US IPO that is expected to value the company at over $3 billion, The Wall Street Journal reported last week, citing people familiar with the matter.

According to the report, Atlassian has tasked Goldman Sachs and Morgan Stanley with conducting the IPO, which it aims to complete by the end of the year.

It adds that the company has filed its prospectus under a clause that allows growth companies with less than US$1 billion in annual revenue to file IPO papers confidentially.

The expected value of the offer would make it the largest IPO of an Australian technology business, handily beating MYOB’s $2 billion ASX listing in May.

Atlassian is one of the key players in Australia’s tech sector. The company was founded in 2002 by Scott Farquhar and Mike Cannon-Brooke. The co-founders continue to own a roughly 78% stake between them and are in a position to be rewarded handsomely from an IPO.

Reactions to the news from Australia’s tech sector have been mixed. Fairfax Media quotes Freelancer founder Matt Barrie as criticising the decision to list in the US rather than Australia, stating that an overseas listing will limit the benefits for the local tech sector.

But Fairfax also quotes Right Click Capital partner Benjamin Chong as stating that an IPO will be a major boon for Australia’s tech sector even if it takes place overseas.

There has been speculation that Atlassian is pursuing a US IPO since the company appointed US-based executive Erik Bardman as CFO in February.

Meanwhile, the boards of Vocus Communications and M2 Group have unanimously agreed on a proposal to merge the two companies to create a telecom service provider with a market cap of over $3 billion.

Under the proposed merger, the combined company will be the fourth largest integrated telco in Australia and the third largest in New Zealand, with combined annual revenues of $1.8 billion before synergies.

It will offer a range of products including retail internet, electricity and gas, corporate and wholesale internet and IP voice services, data centre and cloud services, international and domestic bandwidth and dark fibre infrastructure.

Vocus owns over 1600 km of metro fibre in Australia and over 4300 km of intercity fibre in New Zealand. M2 operates the Commander and Engin managed communications brands in Australia and provides fixed and mobile internet services in New Zealand under the CallPlus, Slingshot, Orcon, 2Talk and Flip brands.

If approved by shareholders and regulators, Vocus has agreed to provide 1.625 Vocus shares for every M2 share. M2 shareholders are set to vote on the proposed deal in early 2016.

“M2 and Vocus are an excellent fit, being highly complementary and culturally aligned. Both have successful track records of creating substantial value for shareholders and, together, we will retain this focus,” M2 Chairman Craig Farrow commented.

“Our ability as a merged company to capture future growth opportunities in Australia and New Zealand will be significantly enhanced.”

Image courtesy of Lending Memo under CC