JSE-listed UCS Group's plans to take its products into the global arena received a boost yesterday when shareholders unanimously approved a proposal to spin off a new company.
The shareholder approval, announced in a statement to the JSE, means UCS is now free to unbundle its shareholding in the entity - currently referred to as Rendalyn Trading, or Product Co. It is to exist as an independent software product business focused on creating a leading brand and product suite for selected verticals in the global retail industry.
UCS shareholders are to receive one unlisted Product Co share for every 10 UCS shares they own. UCS will not own shares in Product Co, although Product Co will have a contractual relationship with UCS Software Manufacturing.
UCS previously said the unbundling of Product Co is part of a plan for the group to expand internationally.
UCS CEO John Bright said at a presentation earlier this year that for UCS Software to achieve its vision of offering "best of breed" software solutions to its customers, it needed to be independent of the product business, "otherwise customers will know that it will be biased towards recommending its own products".
Eyeing the UK
The single biggest challenge to Product Co's success was in building an effective channel to market. He said the traditional business, UCS Software, was the type of business that qualified as an ideal value-added reseller for the product business.
"Product Co needs to be separated from that in order for it to be able to say it's totally independent, because a lot of potential value-added resellers, particularly in the UK, would view UCS, the traditional software services business, as competitors. And this is particularly as UCS expands internationally, and we have previously indicated that we intend going to the UK."
UCS CFO Dean Sparrow has said the identified products and associated intellectual property sold to Product Co were valued at R113.7 million. This was exchanged for Product Co shares, along with a further shareholding paid for with R50 million cash. These are the shares being unbundled.
The UCS share was untraded early this morning after gaining 1c yesterday to close at 456c on volumes of about 1.12 million shares.
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