JSE-listed AdaptIT has bought a controlling interest in education-focused IT and software business ITS Holdings, for R16 million.
AdaptIT says the acquisition will give it a larger client portfolio and increase its public sector footprint. It adds that ITS has a strong annuity revenue base - around 50% of its income - through licensing and support services, which makes it a good buy in the current financial times.
“There are also strong technology synergies between the two groups, predominantly in Oracle technologies, as well as in domain expertise relating to financial and enterprise resource planning systems,” explains AdaptIT in its financial announcement.
According to the company, it will pay R15 million to the Rooibos Trust and R1 million to EDITS Holdings. Rooibos owns 49% of ITS and EDITS holds 51% of the issued share capital. EDITS has agreed to sell 2% of its stake, and Rooibos has sold its entire stake, giving AdaptIT the majority ownership of 51%.
AdaptIT's latest annual report shows it already has just over R14 million cash on hand. The company says it will raise the rest of the funds through business operations between now and the effective acquisition date. It did not confirm when it planned to conclude the deal.
ITS operates from its head office in Pretoria and also has offices in Cape Town, Durban, Ireland and New Zealand. It brings a strong black empowerment portfolio to AdaptIT, which already has a strong empowerment agenda, as a level three contributor.
AdaptIT still needs to gain shareholder approval for the deal.
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