Datatec's proposed buyout of Comztek apparently came about because Comztek wanted to stave off an alleged hostile takeover by Mustek, which owns a large share of the computer distributor.
Sources close to Comztek say Mustek tried to buy out the about 58% it didn't already own through a hostile takeover about two months ago. The listed company has the right of first refusal to buy up the balance of the shares in Comztek.
However, Mustek's offer was 40% lower than the recent bid by Datatec, and not a market-related price, says the source.
The alleged hostile bid resulted in Comztek looking to the market for potential investors, which led to Datatec's announcement earlier this month that it was in talks to buy the company for R97 million.
However, Mustek has not yet agreed to the deal, and has enough voting power to quash Datatec's bid. Datatec has given Mustek until the end of this month to agree to the buyout, and is currently doing a due diligence on Comztek.
Mustek CEO and founder David Kan says the company will only decide whether to sell once Datatec's offer has been clarified, because there are currently too many conditions attached to the bid.
Discounted value
Comztek MD Paul Conradie has confirmed that Mustek put in a hostile bid for Comztek about two months ago. He also verifies the source's statement that the offer was about 40% lower than the R97 million offered by Datatec, and that R97 million is a market-related price.
The Datatec offer is “positive for all stakeholders”, says Conradie. He adds that the deal would be positive for shareholders, staff and the company's growth. Comztek is 58% owned by management, who have pledged their support to the bid from Datatec.
Comztek is a South African-based distributor of networking, security and other hardware and software products. Datatec said in its voluntary announcement that these products are “highly complementary to the activities of the Westcon Distribution business of Datatec in SA”.
The distribution company also has operations in the rest of Africa, which can be added to Westcon's existing pan-African footprint to create a “strategically significant player across many African markets”, Datatec said.
Comztek turned over R789 million in the year to June, a decline on its 2009 contribution of R858 million.
Willing seller
However, Kan denies that Mustek tried to buy Comztek's management out in a hostile manner. He tells ITWeb that one of the founders, Leen van der Bijl, wanted to retire and sell his stake of about 20%.
Comztek was launched in September 1999, but it was initially formed in 1995 as Comzlink, a subsidiary of Centera, which was owned by Siltek and Q Data. Four years after it was formed, Van der Bijl and Conradie bought out Comztek with Mustek's assistance, says Kan. This deal led to Mustek owning a 42% stake.
Kan says Van der Bijl approached Mustek to sell his shares, and Mustek was willing to buy the stake. “If our offer was so unfair, why did Van der Bijl want to take our offer?”
However, he says, Van der Bijl was obliged to offer his shares to Conradie, which he did and Conradie agreed to buy them, although the transaction has not yet been concluded.
Kan says Mustek would have had a 75% voting right if it had bought Van der Bijl out, but that Comztek did not want Mustek to be in control of the company. “I don't know why management thinks it was a hostile take over, Van der Bijl wanted to sell.”
In addition, says Kan, if Mustek was trying to buy out Comztek, it would never have granted permission for Datatec's due diligence. He explains that Mustek has two seats on the Comztek board, which is enough to block Datatec from doing its research. “If I want to be hostile, then I will be hostile.”
Kan does not consider Datatec's bid to be a formal offer, but rather a letter of intent. He says the amount offered may change once the due diligence has been completed, and does not understand why his bid was seen as a 40% discount.
Once Datatec's offer becomes unconditional, Mustek will then have the opportunity to match the final price before Datatec can buy out the company, says Kan. At that stage, the company will make a decision, he adds.
Datatec was not prepared to comment on the shareholder squabble. CFO Ivan Dittrich's only statement was: “Datatec is currently doing due diligence. Our offer remains open until 30 September 2010. We have no further comments.”
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