Unihold Business Solutions, the e-business division of the listed Unihold parent, plans to merge with Siemens Business Services (SBS), as Unihold repositions as an investment holding company.
The merger sees SBS acquiring Unihold Business Solutions (UBS) as a going concern in exchange for a 40% stake in SBS and a R40 million cash payment, subject to the approval of the Competitions Commission.
SBS is jointly owned by Siemens Business Services (which employs 35 000 people in over 60 countries and has annual revenues of approximately 7 billion euro) and Siemens of Southern Africa, which are both subsidiaries of Siemens AG.
Unihold, through UBS, has worked on a number of contracts with SBS, including a R270 million Mossgas contract.
Unihold group management says operating as a small capitalisation player in the current IT market was delivering sub-optimum value to customers, shareholders and staff. Unihold believes the merger will bring it the requisite critical mass to deliver a more complete service.
The deal forms part of Unihold`s plan to reposition itself within the market. After the merger, which sees a third of Unihold`s operations leave the fold, Unihold is left with its local communications division and its 60% stake in UK company Pecaso.
"In order to act in the best interests of these stakeholders, Unihold decided to reposition as an investment holding company, focusing on quality IT investments in SA and abroad that constitute a strategic long-term hold," says Gary Harlow, Unihold CEO.
The cash from the deal will be put to use in eradicating part of Unihold`s debt from the Pecaso acquisition.
SBS CEO Robert G"ogele says the merger brings complementary offerings to what SBS already provides the local market, while giving it a much bigger footprint in the country.
SBS currently operates from Gauteng and only has support for major centres in the rest of the country. The UBS support and infrastructure will give it the foothold it is looking for in the rest of the country, particularly Cape Town.
No staff cuts are expected as a result of the merger, largely because of the lack of overlap in what the two entities offer.
G"ogele says the combined turnover of the new company is expected to be around R550 million.
Mike Struthers will join the new company from Unihold as COO, with Harlow as a director. It has yet to be decided how many other Unihold directors will go across, but Harlow says the agreement between the parties included measures to protect Unihold`s interests despite its minority shareholding.
Struthers says his team is ready to perform in what will be a much bigger player in the local market. He adds that the two-year association the companies have had will make for few cultural problems once the Competition Commission`s approval is received.
The Unihold share price was trading unchanged after the news at 145c this morning.
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