DTC 201211300012A
Acquisition Of Comztek – Leading Pan African Distributor
DATATEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
ACQUISITION OF COMZTEK – LEADING PAN AFRICAN DISTRIBUTOR
Datatec Limited ("Datatec" or “the Group”) (JSE/AIM: DTC), the
international Information and Communications Technology (ICT)
group, has signed an agreement dated 29 November 2012 (“signature
date”) to acquire Comztek Holdings (Pty) Ltd (“Comztek”), a major
ICT and networking distributor in Africa for a consideration of
up to a maximum of R88 million (“the acquisition”).
Comztek is a leading systems distributor with coverage in 26
countries in Africa with operations in South Africa, Namibia,
Zambia, Kenya and Mauritius. It distributes a range of hardware
and software products focused on networking, security and storage,
datacentre and software infrastructure and unified communications
solutions. Comztek has annual revenues in excess of R1bn
(approximately $120m) and more than 200 employees. Based in
Johannesburg, its activities are highly complementary to those of
Datatec’s Westcon business. Comztek has a strong reputation in the
African market and brings good channel access as well as a
comprehensive ICT solution model.
Datatec will acquire 100% of Comztek from its current shareholders
who include Mustek Limited (JSE: MST) and various members of the
management team (“Management Sellers”) through family and employee
trusts.
The acquisition will be settled by the payment of R40 million in
cash funded from new loan finance (R27.4 million to Mustek, R12.6
million to the Management Sellers) and R40 million in Datatec
shares (R12 million, to Mustek, R28 million to the Management
Sellers). A further R8 million will be paid in cash to the
Management Sellers, subject to Comztek meeting certain EBITDA
performance conditions for the 6 months ending 31 December 2012.
The contingent consideration is therefore highly likely to be
finalised before completion of the Transaction.
The acquisition will be subject to the approval of the South
African and other African Competition authorities and other
commercial approvals. The time period for the various Competition
Authorities’ decisions is uncertain but is expected within 3
months from the date of this announcement. These and other
conditions precedent are listed below. A further announcement will
be made in due course specifying the completion date which will be
the effective date for the acquisition.
Following completion and finalisation of the contingent
consideration, the Comztek business will be integrated with
Westcon South Africa (Pty) Ltd (“WSA”) in an internal
reorganisation which will involve Datatec’s BEE partner, the
Mineworkers Investment Corporation (“MIC”) and several members of
the Comztek management team subscribing for shares in WSA to
increase MIC’s share of the combined business to 40%, and Comztek
management’s share to 9.9%, leaving Datatec, through its
subsidiary Westcon Emerging Markets Group (Pty) Ltd with a
shareholding of 50.1% (“the reorganisation”). The proceeds of the
subscriptions for new shares in WSA involved in the reorganisation
will be applied to fund WSA’s working capital. The effective date
for the reorganisation will be upon the fulfilment of the
conditions precedent set out below. The acquisition and the
reorganisation are steps in a planned overall transaction (“the
Transaction”).
Jens Montanana, Datatec's Chief Executive commented:
“This is an exciting opportunity to create a market leadership
position across the continent which will extend and augment our
existing emerging Africa and South African operations and bring a
strong business with an excellent reputation into the Group.
Comztek brings a complimentary vendor portfolio that has minimal
overlap with Westcon's own vendor portfolio, thereby adding strong
new vendor relationships, along with highly skilled and
experienced staff that will allow us to widen our offering to our
respective customer bases. With revenues across Africa exceeding
$300m the combined business will boast the scale and addressable
market to attract new vendors wishing to create a regional
presence. “
“Africa remains a key growth market for us and this deal
significantly expands our footprint and offering into many new
markets. As the continent continues to develop our solutions and
services will play an important part in the rapid adoption of more
advanced IT and telecoms infrastructure.”
Additionally Paul Conradie, Managing Director of Comztek
commented: “This acquisition is a positive move for Comztek’s
customers, our suppliers and our people. By joining forces
with Westcon we will be able to further develop the markets
where we have a presence as well as bolster the breadth of our
offerings. We are delighted that both organisations have
remained focussed and committed throughout this process which
will result in the creation of a business that will have a
market leading position across many parts of the African
continent.”
Share issue
Datatec ordinary shares will be issued to the vendors in
settlement of the R40 million of consideration payable in
Datatec shares. Application will be made to the London Stock
Exchange for the admission of these shares to the AIM Market,
and to the JSE Limited (“the JSE”) for the listing of these
shares. Listing on both exchanges is expected to become
effective within two weeks following the effective date of the
acquisition (“completion”) which is due to occur after
fulfilment of the conditions precedent set out below.
Conditions precedent to the Transaction
The Transaction is subject to the fulfilment of the following
conditions precedent:
- the approval of the South African and other African Competition
authorities and other regulatory and governmental approvals as may
be required for the acquisition;
- Comztek receiving written confirmation from vendors representing
at least 80% in value of Comztek’s last audited turnover that it
will continue to supply Comztek on substantially similar terms and
conditions post the acquisition;
- no material adverse change in Comztek having occurred during the
period between the signature date and completion;
- the completion of a reorganisation process in the Comztek East
Africa business to centralise functions;
- the agreement by MIC Investment Holdings Proprietary Limited and
certain sellers, not including Mustek, to subscribe for shares in
WSA becoming unconditional;
- obtaining a fairness opinion for the Transaction;
- Comztek receiving written confirmation from its lessors
consenting to the change of control of the lessee and to the
assignment of the leases in respect of properties leased by
Comztek ;
- employment contracts being concluded with key Comztek employees;
- the issue of parental guarantees to Comztek’s vendors; and
- consent from providers of finance to Comztek through a special
purpose vehicle for the implementation of the Transaction.
Small related party transaction per the Listings Requirements of
the JSE
The reorganisation planned to follow completion of the
acquisition, involves MIC (a material shareholder), two of whose
directors have also been directors of WSA and are therefore
related parties to Datatec as well as Comztek management, who
through the initial acquisition of Comztek become related parties
to Datatec. As such, the Listings Requirements of the JSE require
written confirmation from an independent professional expert
confirming that the Transaction is fair to Datatec’s shareholders.
An independent professional expert acceptable to the JSE will be
appointed to provide a fairness opinion on the Transaction prior
to completion of the acquisition. The opinion, as well as
confirmation of the availability for the inspection thereof, will
be reported in a further announcement upon its completion.
In addition, in relation to the Transaction, the pro forma
financial effects on Datatec's earnings per share, headline
earnings per share, diluted earnings per share, diluted
headline earnings per share, net asset value per share and net
tangible asset value per share for the period ended and as at
31 August 2012 have been assessed and are all not significant
(below 3%).
Enquiries:
Datatec Limited
(www.datatec.co.za)
Jens Montanana, Chief Executive +44 (0) 1753
Officer 797118
Rob Evans – Chief Financial +27 (0) 11 233
Officer 1221
Wilna de Villiers – Group +27 (0) 11 233
Marketing Manager 1013
Comztek Holdings (Pty) Ltd
Paul Conradie, Managing Director
+27 (0) 11 848 9022
Andries Coetzee, Financial Director
+27 (0) 11 848 9020
Michelle Chettoa, Marketing Manager
+27 (0) 11 848 9512
Jefferies International Limited – Nominated Adviser
and Broker
Nick Adams/Alex Collins +44 (0) 20 7029
8000
finnCap – Broker
Tom Jenkins/Henrik Persson +44 (0) 20 7220
0500
College Hill
Adrian Duffield/Rozi Morris (UK) +44 (0) 20 7457
2020
Frederic Cornet/Lexi Ball (SA) +27 (0) 11 447
3030
Sandton
30 November 2012
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
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