Computer Configurations Holdings (CCH) and US based Amdahl Corporation today announced that CCH has acquired 100% of the business of Amdahl South Africa (Amdahl SA), which in turn is 100% owned by Fujitsu Limited. The acquisition is subject to clearance by The Competitions Board.
CCH will acquire the business for its net asset value, plus a R4 million goodwill payment. The net asset value will be determined by the auditors as at the 26 November 1999.
Commenting on the deal, Mario Pinheiro, Executive Chairman of CCH said that in structuring the deal both parties agreed that the growth proposition of bringing Amdahl SA and CCH together represented the true value of the transaction.
"Amdahl SA is a successful company, however management recognised earlier in the year that it needed a much larger presence and scale to address the South African market. By selling the business to CCH they achieve this, and we acquire a very exciting strategic opportunity."
Don Smith, CEO of Amdahl SA, said, "We undertook discussions with a number of South African companies with a view to both expanding our customer base and increasing our appeal within our traditional large enterprise market segment. CCH, with its strong sales team, added value products, services and solutions and outstanding intellectual capital and skills base made it a very compelling proposition".
The agreement means that CCH will represent Amdahl exclusively in the local market which means representing the Amdahl brand locally. Amdahl`s activities are organised into four operating groups:
The technology group specialises in Mainframe and Server technology and powerful data storage products and packaged offerings. This group is highly complementary with the CCH Enterprise business unit and with ORCA Technologies.
The software group focuses on automated data management techniques and products and will fit the existing systems management offerings of CCH Software Futures.
The IT services and support operating group concentrating in the infrastructure, operational services and product support environments.
The business solutions group comprises DMR Consulting, one of the world`s leading IT consultancies, internationally running at a turnover of around $1,2 billion per annum, advising on application and systems development, including business intelligence and extended enterprise applications. The intellectual capital of DMR will augment the skill set within CCH Consulting giving it access to the latest industry specific methodologies. DMR is the subject of separate negotiations which are currently in progress.
Pinheiro comments; "Amdahl SA is highly complementary to our group and the benefits for both parties are hugely exciting. CCH`s value-added approach to service excellence combined with Amdahl`s world class product range, will allow the group access to a number of major new market opportunities. Amdahl SA provides CCH with a number of highly compatible products and services as well as an immediate entry into the mainframe market, where we have not historically had a presence."
Aletha Ling, CCH`s newly appointed CEO said that the deal represented a major strategic move by CCH:
"There is a great deal of value inherent in the bringing together of CCH, a dynamic, South African focused group and Amdahl, one of the most respected global players," she said. "Amdahl`s mainframe and storage products present CCH with major market opportunities, particularly in the large corporate and public sector, and DMR puts us into play in the strategic management consulting arena. Amdahl SA also completes CCH`s hardware product offerings at the top-end and represents a perfect client fit."
CCH will also benefit from the "favoured nation" status it will enjoy with Amdahl Corporation globally. CCH can directly access exciting global technological developments and intellectual capital, which it will then apply to its local markets.
Steve Coggins, Amdahl Corporation Vice President and General Manager Europe commented:
"This new relationship with CCH is exactly what we have been looking for. Amdahl Corporation has made huge steps forward, expanding our appeal to large customers particularly as we bring the skills and product needed in the e-commerce world. Our partnership with CCH will bring the scale and presence needed to address the South African enterprises in the market place."
Pinheiro also believes that the acquisition makes sound strategic sense for CCH`s data storage subsidiary ORCA Technologies, which is carving out a strong position in the midrange and open systems storage environment, whilst Amdahl`s strengths lie in the larger storage solutions arena.
"The current ORCA range will continue its aggressive penetration of the midrange market," said Pinheiro, "therefore we will only re-brand Amdahl`s mainframe storage suite as ORCA products. ORCA`s range will be augmented by a suite of products that will provide it with immediate access to the mainframe market. In addition, it will also facilitate exciting technology transfer programmes between the two companies."
Industry statistics show that data storage represents a strong area of growth in the IT sector, and that demand for processing power is increasing given the anticipated growth in e-commerce and the move to centralised computing environments.
"We believe we will be able to drive very strong growth out of the business," said Pinheiro "and we anticipate margin enhancement particularly as we intend to integrate and consolidate CCH`s and Amdahl`s Server distribution activities."
"Amdahl SA is a tremendous business," he added "and given the opportunities we already see for it within the group, we anticipate Amdahl will make a significant contribution to CCH`s earnings over time. In addition, we see very exciting developments emerging in the future, particularly as we begin to explore opportunities with Amdahl internationally, and its ultimate parent Fujitsu."
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