Atlassian Seeks Domicile Move to Pave Way for U.S. Initial Offer
Atlassian Corp., an Australian software developer backed by early Facebook Inc. investor Accel Partners, is working on a move to the U.K. to aid an U.S. initial public offering.
Shareholders of the company, founded by two Sydney university students with a A$10,000 ($8,907) credit card loan in 2002, will vote Jan. 29 on whether to move its domicile from Australia to the U.K., according to documents reviewed by Bloomberg News. The move is a step toward a listing on the New York Stock Exchange or Nasdaq, the documents say.
Atlassian is also in talks with at least one unidentified investor who may buy as much as 8 percent of the business after the move to the U.K., according to the documents. Scott Farquhar, who owns about 88 percent of the company with co-founder Mike Cannon-Brookes, declined to name the investor in an e-mailed response to questions on Jan. 3.
An IPO would allow Atlassian, whose products are used by Twitter Inc. and on NASA’s Mars Curiosity rover, to tap demand for technology stocks in the U.S. The value of new share sales by U.S. software and Internet companies in the fourth quarter of 2013 exceeded the market capitalization of the entire sector in Australia, according to data compiled by Bloomberg.
Accel Partners, the first venture capital firm to back Facebook Inc., bought a $60 million stake in Atlassian in 2010 and now owns 10 percent of the company, the documents show. That firm’s partners Rich Wong and Kirk Bowman have two of the eight board seats, according to Atlassian’s website.
The documents, which don’t include a target valuation for the planned IPO, showed earnings before interest, tax, depreciation and amortization of $21 million for the year ended June 2013, with net cash of $90 million on June 30. Sales jumped 34 percent from the previous 12 months to $149 million.
Atlassian’s directors hadn’t made a decision on the timing or structure of an IPO, Farquhar said in his e-mail.
“Mike and I have not made any plans” on how much of their personal holdings they’d retain after a share sale, Farquhar said.
Atlassian’s bug-tracking software and team collaboration products are used by more than 30,000 customers, including Citigroup Inc., EBay Inc., Toyota Motor Corp., Royal Dutch Shell Plc, and Boeing Co., according to the company’s website.
The products are used to track software bugs in Audi AG car systems, organize student information for Baltimore’s Johns Hopkins University, and coordinate between U.S. government agencies, the site shows.
Farquhar and Cannon-Brookes started the company while studying at Sydney’s University of New South Wales because “we both wanted to build something where you didn’t need to wear a suit every day,” Farquhar said by e-mail. The duo now act as joint chief executive officers.
The company sees a U.K. domicile as more attractive to overseas investors, as the country’s foreign-investment regime is more relaxed and its corporate law is better understood than regulations in Australia, according to the documents prepared for shareholders and option-holders as part of a scheme booklet ahead of the Jan. 29 restructuring meeting.
U.K.-registered shares would be attractive if Atlassian tried to use them as payment for future takeovers, the documents state. The U.K. also offers a more attractive tax and regulatory system than the U.S., according to the documents.
There are fewer than 50 software companies listed on the Australian Securities Exchange and they trade at an average 20 times Ebitda, according to a report by KPMG LLC included in the documentation. U.S.-listed software companies were valued at 34.7 times Ebitda, KPMG said. Applying the 34.7 multiple to Atlassian would value the company at about $730 million, data compiled by Bloomberg show.
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