London and Johannesburg-listed Datatec has taken the first step to re-establish itself in the Asia-pacific region.
This morning, the company said it had bought NetStar Group Holding, for $19.8 million, which it will pay for in shares. The deal is worth about R148.2 million in local currency.
NetStar is a regional Asia-Pacific Cisco-focused network integrator, with operations in Australia, Singapore, Taiwan, Malaysia, Hong Kong, and mainland China. It will be integrated into Datatec's ICT infrastructure solutions and service business, Logicalis.
CFO Ivan Dittrich says, while the deal is small, at about 3% of Datatec's R4.6 billion market capitalisation, it is significant. Datatec does not have a significant presence in the region, with the main player in the area being Weston.
Logicalis had an operation in Australia, but this was sold several years ago, he explains. Purchasing NetStar re-establishes the subsidiary's presence in the region. “It's a deal that gives us a multi-country footprint,” says Dittrich.
Bottom line
The deal will bolster Datatec's revenue by about $70 million on an annualised basis for the year to June. In October, Datatec reported revenue of $1.8 billion during the half-year to August.
Datatec has set itself the target of full-year revenue of between $3.7 billion and $4 billion. Last year, revenue was $4.2 billion.
CEO Jens Montanana says the earnings-enhancing acquisition “establishes a sizeable presence for Logicalis across South East Asia, China and Australia, in one move”.
“In addition to now being able to provide our customers with wider international capabilities, NetStar provides the ideal platform for Logicalis to grow organically and by acquisition across the region.”
NetStar is one of the more established independent providers of network integration and managed services across the Asia-Pacific region. It has a customer base across a variety of vertical sectors, including government, telecommunications, hospitality and finance.
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