DTC
DTC
DTC - Datatec Limited - 100% Ownership of Westcon Group
DATATEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
("Datatec")
100% OWNERSHIP OF WESTCON GROUP
1. Introduction and Rationale
Datatec announces that its subsidiary Westcon Group, Inc. ("Westcon") has
agreed to acquire the outstanding 2.6% interest in its own share capital
which is not already owned by Datatec for a consideration of $14.252
million.
As a result of this agreement (the "Transaction") Datatec will hold 100% of
the equity and voting rights in Westcon.
2. The Transaction
2.1 Business and structure
Westcon is the holding company of Westcon Group, a global distributor
of ICT equipment which is Datatec`s largest subsidiary.
Prior to the Transaction, the equity of Westcon was owned 97.4% by
Datatec and 2.6% by Routine Capital Corporation ("Routine Capital").
The Transaction has been effected by a Stock Purchase Agreement signed
on 6 October 2010 under the terms of which the Westcon shares held by
Routine Capital will be repurchased and then cancelled by Westcon.
2.2 Consideration
The consideration for the Transaction is US$ 14.252 million made up of
US$ 2.375 million in cash and a loan note for US$11.877 million
bearing interest at 4% per annum and repayable in five equal annual
instalments starting on 30 September 2011.
The consideration was arrived at by using an independent external
valuation for 100% of the shares in Westcon as at 28 February 2010,
and then applying a 23% discount for lack of control, and a further
20% discount for lack of marketability in the subsidiary.
2.3 Financial effects
The financial effects have been prepared for illustrative purposes
only and because of its nature may not fairly present the issuer`s
financial position, changes in equity, results of operations or cash
flows. The financial effects are the responsibility of the directors.
The pro forma financial effects of the Transaction on Datatec`s
earnings per share, headline earnings per share, net asset value
("NAV") per share and net tangible asset value ("NTAV") per share for
the period ended 28 February 2010 are illustrated in the table below.
(US cents) Before the Pro-Forma Change
Transaction after the
Transaction
Earnings per Share 17.0 17.3 +1.9%
Headline Earnings per Share 17.0 17.3 +1.9%
Underlying* Earnings per Share 30.3 30.7 +1.1%
Diluted Earnings per Share 16.8 17.1 +1.9%
NAV per Share 394 386 -2.0%
NTAV per Share 153 145 -5.2%
*excluding goodwill and intangibles impairment, amortisation of acquired
intangible fixed assets, profit or loss on sale of assets and businesses,
fair value movements on acquisition-related financial instruments and
unrealised foreign exchange movements.
The pro-forma earnings per share, headline earnings per share, underlying
earnings per share, NAV and NTAV have been prepared on the following
assumptions:
- figures before the Transaction are the audited results of Datatec for
the year ended 28 February 2010;
- 182.3 million Datatec shares in issue at 28 February 2010;
- interest rate of 4% p.a. on loan note payable;
- effective tax rate of 34%;and
- the NAV and NTAV pro-forma assumes the Transaction was concluded
effective 28 February 2010.
2.4 Conditions precedent
The implementation of the Transaction is not subject to any conditions
precedent and is accordingly immediately effective.
3. Small related party transaction
The owner of Routine Capital is a director of Westcon and is therefore a
related party to Datatec. The Listings Requirements of the JSE Limited
("JSE") require written confirmation from an independent professional
expert confirming that the Transaction is fair to Datatec`s shareholders.
BDO Corporate Finance (Pty) Ltd, as the independent professional expert
acceptable to the JSE, has confirmed that the Transaction is fair and their
fairness opinion is available for inspection at Datatec`s registered office
until 5 November 2010.
Sandton
7 October 2010
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 07/10/2010 08:00:01 Produced by the JSE SENS Department.
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