Internet services provider Spirit Technology (ASX:ST1) is back on the M&A trail, this time with a push into cybersecurity.

The company has snapped up cybersecurity firm Intalock for $15m — $12.5m in cash and $2.5m in ST1 equity.

Shares in the company rose by around six per cent at the opening bell to new multi-year highs above 40c.

Cybersecurity strategy

ST1 said the deal marks the beginning of a strategic push into cybersecurity, following an “extensive review” of potential acquisition opportunities.

Intalock was founded in 2010 and serves a “blue chip customer portfolio” across the corporate and government sectors.

Gaining a client base in those sectors was the first key rationale for the purchase, ST1 said.

It also wants to generate product synergies, by including cybersecurity services as part of its bundled IT and telco packages.

“Cybersecurity bundled with our range of Data, Cloud and Voice services is the modern product range Spirit is becoming a leader in,” the company said.

The cash component of the deal will be paid from ST1’s cash reserves, as well as a drawdown on its CBA debt facility.

For the share-based component, Spirit will issue stock at 38c to Intalock’s ownership group which will be held in escrow for 12 months.

Spirit has adopted a growth-by-acquisition strategy in the wake of the COVID-19 pandemic.

The company also acquired cloud-services business VPD Group for $14m in a transaction announced at the end of June.

Trading update

Accompanying the acquisition announcement, Spirit also provided a December quarter trading update where it flagged record monthly revenues of $6.5m in October (up 16 per cent m/m).

The company also said it booked sales which will bring in new recurring revenues of $6.9m in the month of November, with contract wins across the corporate, education and healthcare.

CEO Sol Lukatsky said those contract wins came at the expense of large telco providers as the company continues to win market share.

They provide “examples of how the complete offering of Spirit Technology Solutions is helping us to win business, and gives us great confidence that executing on this sales model will continue to drive strong organic growth in 2021”, Lukatsky said.