Management at retail IT solutions provider Affinity Logic has bought Wooltru`s 33% holding in the company for R41.7 million in cash.
The deal sees partner Datatec increasing its stake to 55%, while management and staff will hold 33% of the company. The remaining shares will rest with independent shareholders.
Affinity management will pay R35 million to Wooltru as part of a loan repayment, while Datatec has footed the remaining R7 million. The latter amount will be paid back to Datatec by Affinity`s management over an unspecified time period.
Affinity was established in 1998 as a joint venture between Wooltru and fellow listed company Datatec. Its original aim was to migrate various companies within the Wooltru group to a more technically competitive service platform.
"The management buy-in is a very positive step for Affinity Logic as it gives the company an independent market position," says Affinity Logic CEO Richard van Rensburg.
"With turnover of approximately R200 million, 80% of which is recurring revenue, a well capitalised balance sheet and a committed management team, we are well poised for solid growth," he says.
Affinity`s management has been talking about a buy-out since October last year when the company launched its new trade integration service, Trade Logic Services.
Affinity has always had a strong reliance on Wooltru for its revenue stream, but Affinity`s management says this is diminishing and at last count the company derived 20% of its revenue from outside the Wooltru group.
Other clients now serviced by Affinity include Makro, Shield, Massmart, CNA and Spar.
David Pfaff, executive director at Datatec and newly appointed non-executive chairman at Affinity Logic, says Datatec is "positive about Affinity Logic`s medium-term potential to unlock shareholder value. The business is well capitalised and has a strong management team."
Despite Datatec`s majority shareholding in Affinity, Pfaff says Datatec is happy with management and will not make any changes to Affinity`s board.
Commenting on the company`s future, Van Rensburg says: "We have made substantial investments over the last two years to establish an innovative computing platform and associated portfolio of services. This, combined with our strong industry focus on the retail and consumer goods industries, gives us a number of advantages as we move forward on our new independent growth path."
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