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Reckon buys into Melbourne IT

Reckon buys into Melbourne IT

Reckon Limited (ASX:RKN) has paid $7.3 million to acquire a 4.97% stake in Melbourne IT Limited (ASX:MLB).

Reckon, which provides financial management software, said it would seek to establish a commercial partnership with Melbourne IT.

But the company added it currently has no plans to increase its stake in Melbourne IT any further, or to mount a takeover offer for the company.

Melbourne IT provides domain names, hosting and other digital products and services. The company reported a net profit of $16 million in calendar 2010, but this was down 4.5% on the prior year due to expenses accrued from a project to expand into integrated web services.

In a market update, Reckon said it had funded the share purchase using existing cash reserves and debt facilities.

The company added that it considers the investment to be “a strategic investment in a potentially significant business partner.”

Reckon's own 2010 profit grew 27% to $17.2 million, from 6% higher revenue of $90.1 million.

MLB shares grew 4.68% on Wednesday to $1.900, while RKN declined 2.59% to $2.630.

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