TZ (ASX:TZL) has received an approach from SRA Solutions to acquire the exclusive global manufacturing rights to its DC Security Products.
SRA Solutions, a renowned Australian-based manufacturer of data centre infrastructure solutions, is currently TZ's preferred reseller in the Australian market.
The proposal from SRA Solutions includes an upfront non-refundable payment of US$350,000 ($565,081) with ongoing royalties ranging from 5% to 15% on sales.
Additionally, discussions are ongoing regarding a minimum annual royalty payment and potential pricing adjustments.
The proposed agreement would see SRA Solutions take over manufacturing responsibilities while continuing to market the products under the established TZ brand.
"This transaction, if it proceeds, would potentially deliver a high margin annuity royalty business, subject to the final negotiated deal structure," said Peter Graham, Chairman of TZ.
The board of TZ is considering SRA's proposal, alongside other alternatives, due to the anticipated growth in the data centre market, spurred by increased infrastructure requirements for AI-enabled facilities.
There is heightened interest from major customers and new prospects, such as Microsoft, which is exploring TZ solutions in pilot programs for its AI data centres.
Currently, there is no certainty that a transaction with SRA will occur.
TZ is an ASX-listed company which offers solutions that can manage assets or manage space and utility. The company offers smart lockers for information technology asset management, smart lockers for package asset management, and secure personal employee storage solutions.
At the time of reporting, TZ's share price was $0.05.