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Datatec - Press Release: Datatec establishes new BEE Force in SA IT Industry
DATATEC LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
("Datatec" or "the Company")
PRESS RELEASE: DATATEC ESTABLISHES NEW BEE FORCE IN SA IT INDUSTRY
The JSE listed Datatec Group announced today that it"s South African operations
will merge with African Legend Technologies to form an R800 million-a-year IT
company. The Datatec businesses should contribute R500 million to the combined
entities" revenue while the African Legend businesses are estimated to
contribute R300 million.
Datatec will have a 55% shareholding and African Legend Technologies will hold
the remaining 45% in the newly merged entity to be known as African Legend
Indigo.
African Legend Indigo will include Datatec"s RangeGate and the two African
Legend Technologies businesses, African Legend Indigo Pty (Ltd) and African
Legend Solutions Pty (Ltd).
Westcon AME, Datatec"s networking equipment distributor will continue to operate
as a stand alone business. However African Legend Technologies will take a 45%
shareholding in Westcon AME.
The comparable size and nature of the merged operations is such that no vendor
finance will be required to facilitate the deal. The proposed merger is subject
to competition commission approval.
African Legend Indigo will be led by Chief Executive Officer Michael Jacobus,
who has led African Legend Indigo Pty (Ltd) for the past 3 years. Key African
Legend and Datatec executives will take positions on the new board.
According to Jens Montanana, CEO of Datatec, the merger will create a truly
black empowered ICT company.
"We are excited about this deal on a number of levels. The merger will create
an IT company that is 45% black owned, which is significantly more than the ICT
Charter calls for, and we expect it to add significant shareholder value by
providing us with the critical mass we need to take the new business to the next
level and to consistently achieve the sort of growth recorded by Datatec"s other
operations in the US, the UK and Europe over the past 12 to 18 months."
According to Mashudu Tshivhase, Chairman of African Legend Indigo and African
Legend Technologies, the fit between the African Legend companies and RangeGate
is excellent. "Culturally there are great synergies," he says. "And there is a
limited overlap in our client base which presents great opportunity for cross
selling our services across the business. Through the merger we will build a
strong organization that will be in a position to make a positive contribution
to bridging the digital divide throughout the whole African continent."
In May Datatec posted record revenue and profits for its financial year to
February 2006. The Company achieved an 18% increase in revenue to $2,98
billion, significant growth in operating profit to $69m and its headline
earnings rose by 650% to 26.91 US cents.
Ends
About Datatec:
Datatec is a leading international networking, systems and IT services company
listed on the JSE Limited in South Africa, with operations in many of the
world"s leading economies. Datatec"s international operations contribute in
excess of 95% of the Group"s revenues mainly from the United States and Europe.
The Group positions itself as an active technology holding company focusing on
investing in and developing lines of business which are complementary to its
positioning as a networking, systems, integration service provider and
consultancy group.
The group employs approximately 3 000 information and communication technology
(ICT) professionals around the world in over 20 countries in three principal
subsidiaries -
- Westcon, New York based and one of the world"s largest value added
distributors of convergence, security and IP products, sourced largely from
global market leaders Cisco, Avaya and Nortel.
- Logicalis, London based and an international provider of high performance
IT systems and integration solutions based on strong strategic alliances
with market leaders Cisco, HP and IBM.
- Analysys Mason, Cambridge based and a leading international
telecommunications, convergence, IT strategy and management consultancy
providing business solutions to public and private sector organisations
world-wide.
The group"s other interests comprise Westcon AME and OnLine, mirrors of
Westcon"s operations in the US but with the focus on markets in the Middle East
and Africa, and RangeGate, a specialist mobile solutions provider to blue chip
companies in the UK and South Africa.
About African Legends Technologies:
African Legend Technologies is owned by African Legend Investment Ltd, a Black-
owned holding company. African Legend Technologies operates two subsidiaries,
African Legend Indigo and African Legend Solutions.
African Legend Indigo was formed in April 2003 through a management buyout of
the Enterprise Solutions business of MGX Technologies, with the support of ALT
as a BEE partner. This division of MGX was profitable at the time. The value of
the management buyout was R19 million, however all of this was funded by ALT and
management was not required to invest any capital in the buyout.
African Legend Indigo was immediately positioned as a black-owned IT company
with ALT as a 57.5% shareholder. Within six months, the company was one of the
first IT businesses in South Africa to be accorded an A rating by EmPowerdex.
African Legend Indigo provides IT solutions to the telecommunications industry,
to financial services and to the public sector with its vendor partners Sun
Microsystems, BEA, BMC Software, Remedy and Veritas.
African Legend Solutions was formed in 1999 through acquisition of Star Award
Microsystems by African Legend Technologies in 2000. The company"s business
model was built around the concept of "design, build and operate". They provide
their client base with solutions design including strategic and business process
consulting, project services, change management and programme development,
solutions development including implementation and support of a range of
business applications such as ERP, DMS, Business Intelligence and solutions
support including software configuration and enhancement, software training and
technical support. African Legend Solutions provides solutions to the South
African public and private sector.
Date: 11/07/2006 09:28:15 AM Produced by the JSE SENS Department
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