Datatec (JSE and LSE: DTC), the international ICT group, announced today that its subsidiary, Westcon Africa Middle East (Westcon), has acquired a 51% interest in the Sparnoon-Dynatech Group, an established African ICT distributor.
The vendors retain a 49% shareholding, with a mechanism whereby up to 100% could be acquired over five years from completion.
As part of the transaction, Sparnoon-Dynatech Group has itself acquired 100% of JET Distribution, another African ICT distributor. The consideration paid by Datatec was $7.2 million in cash.
These acquisitions are expected to be earnings accretive to Datatec. Revenue of Westcon's South African and African distribution operations will increase from approximately $70 million to approximately $150 million on an annualised basis, as a result of these acquisitions, and EBITDA will increase from $2.1 million to $3.6 million on an annualised basis. Net cash acquired with these acquisitions is $0.3 million.
The acquisitions are in-line with the group's stated strategy to grow its emerging market footprint. The acquisitions extend Westcon's footprint into Botswana, Ghana, Kenya, Namibia, Nigeria, Tanzania and Uganda and positions the company as the only global ICT distributor operating on the African continent, with warehousing and logistics support in Africa, Europe, and Dubai. Other key benefits include access to a broader and more immediately available stock than that offered by competitors, and the addition of valuable market knowledge and experience of Africa's rapidly developing ICT market.
Jens Montanana, Datatec Group Chief Executive, commented: "These acquisitions boost the group's presence in the emerging markets, as well as increase our scale and enhance our product mix. Both are key priorities for Datatec. They also enhance Westcon's industry-leading position in the networking, security and convergence markets, with its footprint reaching beyond South Africa into seven other African territories where there is significant growth potential."
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Datatec is an international ICT group focused on the supply of advanced ICT and the delivery of professional services into the higher growth segments of the global market. The group's main lines of business comprise the global distribution of advanced networking and communications convergence products (Westcon Group), IT infrastructure solutions and network integration (Logicalis) and strategic telecommunications consulting (Analysys Mason Group). Datatec is registered in South Africa and its shares are listed in Johannesburg and London. The group has 3 000 employees around the world. In the year to 28 February 2007, the Group reported an increase in revenue of 17% to $3.2 billion (2006: $2.7 billion), operating profit increased 45% to $100 million (2006: $69 million), and headline earnings per share grew to 40.8 cents (2006: 26.9 cents).
Westcon Africa Middle East (Westcon)
Westcon, part of the Datatec Group, is a leading distributor of converged communications solutions across sub-Saharan Africa. Westcon is made up of three focused branded sales divisions: Comstor, Westcon and Scantec.
Through these divisions, Westcon is able to deliver more value to resellers, system integrators and service providers through strong relationships with vendors. Westcon is strategically aligned with leading vendors that are shaping the future of the networking industry. These include 3Com, Avaya, Cisco Systems, Juniper, Nortel, Symbol and Zebra, as well as other innovators of next-generation networking, scanning and printing.
The Sparnoon-Dynatech Group
Established in 1994, the Sparnoon-Dynatech Group is one of the largest ICT distributors in sub-Saharan Africa with offices in Kenya, Nigeria, Tanzania and Uganda and logistic centres in the UK, Kenya and Dubai that provide rapid response to pricing requests and first-class logistics capabilities. It distributes Cisco, Dell, Epson, HP, Novell and TallyGenicom. The company has most recently been awarded the Cisco Distributor Partner of the Year and Cisco Value-Added Distributor of the Year for 2006.
JET Distribution
JET Distribution is one of Africa's leading distributors for Cisco, Dell, Symantec and APC products. JET Distribution is currently the largest Cisco distributor in the Pan African Region.
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