African Renaissance Holdings (ARH) has acquired a 25% stake in Marconi Communications South Africa in a deal the parties value at more than R130 million.
[VIDEO]The deal consists of a cash payment and an effective 30% holding in ARH by Marconi and follows a decision by African Renaissance to become involved in the telecommunications market.
Marconi, listed on Nasdaq and the London Stock Exchange, is focusing its attention on broadband optical network and telecommunications equipment.
"This is our beachhead, our fighter jet, in the telecommunications arena," said ARH chairman Jabu Mabuza at the announcement of the deal. "We intend to be a big player as supplier to Telkom."
[VIDEO]Marconi SA has also set its sights on Transtel, the Transnet subsidiary, and intends to extend its business into other Southern African Development Community (SADC) countries using SA as a springboard.
ARH receives its stake, valued at R138 million, at a discount which puts the purchase price at R110 million; R71 million of that is in the form of redeemable preference shares, with the balance made up by a cash payment and shares.
The ARH stake in Marconi SA could increase to 30% within 12 months, based on performance criteria.
[VIDEO]"We are very determined to make that happen," says ARH CEO Gavin Pieterse.
ARH`s other holdings include a 25.1% stake in debis Southern Africa IT Services, and Pieterse says the synergies between the outsourcing and telecoms holdings are "almost apparent".
Peter Brown, Marconi president for the EMEA region, says the deal will provide his company with new prospects in a market he has identified as among the six most crucial outside North America. The other five markets are Australia, Malaysia, Germany, Italy and the UK.
[VIDEO]"I want Marconi to command the markets of these countries," says Brown. "They are my six big hopes.
"I am sure the relationship will lead to many new business opportunities and the input from ARH through its representatives on our MCSA [Marconi South Africa] board will be invaluable."
[VIDEO]Former minister of defence Joe Modise serves on the ARH board, and the company counts among its shareholders Post Office chairman Max Maisela and aviation control board chairman Israel Skosana.
Mabuza says ARH`s main role will be to "help Marconi understand the lay of the land".
(Video by Vladimir Majkic)
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