Both the Business Connexion Group (BCX) and UCS yesterday issued cautionaries in which they indicated they were in discussions.
However, it is unclear whether the companies are in talks with each other, as neither Stock Exchange News Service announcement provided any clarity around the discussions. As the IT groups are under cautionary, they cannot provide more information than what is in the announcement.
The sector has seen several large deals being announced recently, such as the July announcement that Japanese group Nippon Telegraph and Telephone Corporation would buy Dimension Data for R24.2 billion.
A few days later, Pinnacle Technology Holdings said it was buying Axiz Technology, in a deal worth R170.9 million. In addition, Jasco and Spescom are set to merge to create a R1 billion company.
Jasco will pay Spescom R11.8 million, and issue 31.9 million new shares in return for Spescom, the companies said in a joint statement early last month.
London- and Johannesburg-listed Datatec is also in talks to buy all of Comztek for R97 million. The deadline for Mustek to agree to sell its 42% stake to Datatec expired yesterday.
Good deals available
Irnest Kaplan, MD of Kaplan Equity Analysts, says companies are looking for bargains as the IT sector has not fully recovered from the recent global recession. “There are quite a few good bargains out there.”
Kaplan does not view the latest activity as a sign of major consolidation occurring in the market. He says companies are looking for opportunistic transactions as many firms could be undervalued.
However, says Kaplan, foreign groups are interested in local companies, which is evidenced in recent major announcements such as Dimension Data's buyout, and retailer Walmart's offer for Massmart.
UCS's announcement drove its share price 13.1% higher yesterday to close at 190c, which is a 22c gain. BCX's share closed flat at 620c.
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