JSE-listed IT solutions and infrastructure provider Datacentrix has bought Solution Management (SM) Networx for a total of R33.22 million as part of its goal to increase its presence in Johannesburg.
SM Networx is an IT infrastructure and services company with a staff of 40.
Datacentrix executive chairman Gary Morolo says the group has identified Johannesburg as an area for future growth opportunities.
"We are effectively sticking to our knitting, just in a different geographical location," he adds.
While Datacentrix says it is paying R20 million cash and R13.22 million in shares for the company, the final amount is dependent on profit warranties being met.
Had the acquisition taken place in the year to 28 February 2002, it would have seen Datacentrix report headline earnings per share of 18.4c for that period, up 10% from the reported 16.7c.
Its net asset value (NAV) per share would have been 4% higher at 66.2c, while the tangible NAV would have been 18% lower at 44.8c per share.
However, the group says the maximum possible amount of shares to be issued was used in the calculation, even though these shares might be issued only over the next three financial years, depending on profit warranties being met. "Therefore, the dilution in tangible net asset value per share is unlikely to be realised," it adds.
Morolo says the full integration of SM Networx marks the culmination of an 18-month search for an appropriate Johannesburg-based operation.
"SM Networx offers a strong, flat management structure, exceptional teamwork, committed staff and a strong balance sheet. A cultural and value system, which provides an excellent fit with that of Datacentrix, further ensures that integration time will be minimised, and allows Datacentrix to immediately focus on customers and the marketplace."
The deal will allow Datacentrix to expand its current enterprise customer base and access skills and people with experience of the Johannesburg market.
The acquired company will effectively become Datacentrix Johannesburg, with the current five partners - remaining as management. Datacentrix says there will be no job losses.
The acquisition is conditional upon the vendors entering into employment contracts with a minimum of three years, the completion of a due diligence investigation and the approval of the Datacentrix board and regulators.
"With the changes in the market, consolidation is inevitable," says Morolo. "This acquisition will enhance the Datacentrix group`s ability to deliver to Johannesburg customers and continue our tradition of attracting quality business and people."
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