UCS buys back division

Johannesburg, 26 Jan 2007

JSE-listed UCS's agreement to buy back a quarter stake in its solutions division has resulted in it becoming black empowered.

The retail software firm yesterday told shareholders it had entered into an agreement with Tactical Software Systems (TSS) to buy back a 25.1% stake in UCS Solutions, for R80 million.

As a result of the deal, UCS will have black economic empowerment ownership of about 9.8% at group level.

UCS's announcement follows a cautionary announcement last year. A previous transaction, which came into effect in July last year, saw UCS Solutions acquire 60% of the equity of TSS Managed Services (TSS MS) and 100% equity of Quadrant Consulting.

These transactions were paid for through the issue of 25.1% of the equity of UCS Solutions to TSS. "UCS and TSS have now agreed to roll the TSS 25.1% shareholding in UCS Solutions to UCS," says UCS.

UCS will issue about 24.2 million shares to TSS at R3 each to pay for the transaction. Yesterday, the company's share closed at R3.70, down 7c from Wednesday's close.

Should the weighted average price of these shares not reach the total settlement amount, UCS will pay out cash to cover the difference, although this is limited to R7.3 million, it said.

The transaction, which is still subject to conditions, becomes effective on 1 March. UCS expects basic earnings per share to show an improvement of about 6.7% after the deal. Headline earnings per share are expected to improve by 13.2% on an illustrated basis.