Cybersecurity firm archTIS (ASX:AR9) has got on the acquisition trail.

The company announced it will acquired Nuclear Cyber in a share-based deal valued at $9.75 million.

Headquartered in Boston (with an office in Melbourne), Nucleus Cyber provides information protection across the product suite for global computing giant Microsoft.

archTIS said the deal will give it a larger geographical footprint and increased revenue diversity.

In a rough day for the broader market, shares in AR9 rose by around 5 per cent on news of the deal.

The stock is holding its gains of nearly 40c after a ~300pc rally since June.


Microsoft opportunity

Commenting on the acquisition, CEO Daniel Lai said he’s optimistic the acquisition will be “transformative for archTIS”.

Along with market access to the product suite of Microsoft, Lai said the deal opens up additional sales channels and is an important step in the company’s efforts to establish a global distribution strategy.

In addition, the two business have worked on projects before and archTIS expects the transition to a merged group will be seamless.

“All key senior executives from Nucleus Cyber have agreed to join archTIS’ senior management team, significantly enhancing our North American and Microsoft product suite expertise,” archTIS said.

Under the terms of the deal, archTIS will pay an upfront consideration of $6.25m in AR9 stock.

An additional $3.5m in shares will be payable upon Nucleus reaching “certain defined revenue and corporate milestones”.

By executing a share-based deal, archTIS “remains in a strong cash position with circa $4m cash at hand”, the company said.

Nucleus Cyber’s products are used across Microsoft’s suite of digital collaboration products such as Teams.

archTIS flagged the company’s NC Protect solutions, which “provides a simpler, faster and cheaper solution to tailor information protection for file sharing, messaging and chat across collaboration tools”.

The company also provides software to help protect business-critical information stored in the cloud.

Nucleus Cyber CEO Kurt Mueffelmann said the combined group will create a stronger entity to meet the ongoing demand for cybersecurity services in the wake of the COVID-19 pandemic.

“Secure information sharing across enterprise and government is an ongoing problem, exacerbated by the exponential increase in remote work and the use of Microsoft’s collaboration tools that have been fuelled by the pandemic,” he said.

“I look forward to joining archTIS as its Chief Operating Officer and continuing to accelerate our growth.”