Just two months after its last acquisition software logistics business WiseTech Global Ltd (ASX: WTC) has moved to acquire 'messaging solutions provider' Xware for $12 million plus potential multi-year earn outs related to revenue growth and other general performance targets.
For a $7.3 billion business like WiseTech the acquisition is not material in itself and WiseTech recently raised over $300 million in cash from investors to fund its strategy of acquisitive growth to help it build a market-leading product that has competitive advantages around the world.
A lot of share market businesses attempt an aggressive acquisition strategy as part of their overall growth, but surprisingly few succeed over the long term and it's only a year or two after the acquisitions have been completed that investors will see their success or not flow through to the group's financials.
As such WiseTech remains a high risk / high reward bet given its strategy and valuation.
The stock is down 3% to $22.42 today but probably not in response to the acquisition news, as it commonly rises or falls by this kind of percentage depending on swinging investor sentiment over the outlook for the business and tech sector in general.
For example other software players like Pro Medicus Limited (ASX: PME) and AfterPay Touch Group Ltd (ASX: APT) are both up 3% or more on no material news.
