Business software group Reckon has abandoned its plans to move closer to Melbourne IT, selling its entire stake in the company, and booking a heavy loss in the process.
Reckon said it raised $4.99 million from the sale of the bulk of its 4.97 per cent stake in Melbourne IT, although the total amount raised would have been much higher.
It paid $5.64 million for the shares sold, indicating a $650,000 loss on this tranche of its holding.
Reckon disclosed the sale in its recently released annual report. Reckon held 5 per cent of Melbourne IT’s capital, totalling approximately 4.1 million shares. The shares were acquired in 2011.
In its annual report it disclosed the sale of 3.1 million shares, and since then it has sold the rest of its holding, chief executive, Mr Clive Rabie said yesterday.
Reckon continues to pursue its strategy of including web hosting, domain name re-sales, e-commerce enablement and allied services as part of its offering to small businesses, but has decided that the strategic equity investment in Melbourne IT is not essential to this strategy.
‘‘We’ve sold our entire holding,’’ he said. ‘‘We originally sought a strategic relationship with them. After further consideration, we decided we didn’t need a holding in the company.’’
‘‘We’re not share traders,’’ Mr Rabie said of the sale, which has resulted in a large loss being incurred.
The cash raised from that sale has helped fund the recent on-market buy-back of shares, as directors took advantage of a sharp decline on the news in late March that Reckon would break its long standing licensing agreement with US accounting software developer Intuit Inc.
Reckon is to end its vendor arrangement with US accounting software developer Intuit in 2014, following a difference in strategy in moving into online delivery and the use of cloud computing.
More recently, it has also agreed to pay $660,000 for a 30 per cent stake in Connect2Field Holdings Pty Ltd.