For your interest - from BRW. Companies that grow by acquisition...

For your interest - from BRW.



Companies that grow by acquisition are a tougher sell, especially in a nervous market where the cost of capital is rising. For every Toll Holdings or Photon Group that successfully buys and integrates companies, many others destroy shareholder value.

...Another serial acquirer, destra Corporation, has fallen from 40 cents to 20 cents in six months. The emerging digital media company has an interesting business model in a lucrative space, but does not yet have much support among fund managers, although it has attracted Prime Media Communications and Lachlan Murdoch to its share register. With a market capitalisation of less than $80 million, destra is still too small and unpredictable for most fund managers. Few brokers cover the stock.

The Melbourne company has changed its business model three times in eight years: from online music retailer to web hoster to integrated digital media company that sells content and advertising. This market is harder to compare destra's accounts because 2007-08 will be its full year in its current incarnation.

...For all its risks, destra's strategy could create big value. It is racing to capitalise on big structural shifts in media consumption and advertising. Multi-channelling, internet television and personal recording devices should see exponential growth in content demand and an accelaration of media fragmentation. At the same time, advertisers are finding it harder to reach younger audiences, especially when on-demand technologies let them block ads. In the background are established media companies that have struggled to attract younger audiences.

...Destra's true value may be its ability to attract edgy brands and do more with them. It is trying to lock up the supply of cool Gen Y content - brands may come and go but it takes time to build valuable mastheads. Destra's other strength is in moving faster than big media companies that find it hard to fuse editorial and advertising and attract gen Y audiences.

Source- http://www.destra.com/Newsroom/News/2008/A-Serial-Acquirer/

Cheers

Oscar