The Datatec businesses should contribute R500 million to the combined entities' revenue while the African Legend businesses are estimated to contribute R300 million.
Datatec will have a 55% shareholding and African Legend Technologies will hold the remaining 45% in the newly merged entity to be known as African Legend Indigo.
African Legend Indigo will include Datatec's RangeGate and the two African Legend Technologies businesses, African Legend Indigo Pty (Ltd) and African Legend Solutions Pty (Ltd).
Westcon AME, Datatec's networking equipment distributor will continue to operate as a stand alone business. However African Legend Technologies will take a 45% shareholding in Westcon AME.
The comparable size and nature of the merged operations is such that no vendor finance will be required to facilitate the deal. The proposed merger is subject to competition commission approval.
African Legend Indigo will be led by Chief Executive Officer Michael Jacobus, who has led African Legend Indigo Pty (Ltd) for the past 3 years. Key African Legend and Datatec executives will take positions on the new board.
According to Jens Montanana, CEO of Datatec, the merger will create a truly black empowered ICT company.
"We are excited about this deal on a number of levels. The merger will create an IT company that is 45% black owned, which is significantly more than the ICT Charter calls for, and we expect it to add significant shareholder value by providing us with the critical mass we need to take the new business to the next level and to consistently achieve the sort of growth recorded by Datatec's other operations in the US, the UK and Europe over the past 12 to 18 months."
According to Mashudu Tshivhase, Chairman of African Legend Indigo and African Legend Technologies, the fit between the African Legend companies and RangeGate is excellent. "Culturally there are great synergies," he says. "And there is a limited overlap in our client base which presents great opportunity for cross selling our services across the business. Through the merger we will build a strong organization that will be in a position to make a positive contribution to bridging the digital divide throughout the whole African continent. "
In May Datatec posted record revenue and profits for its financial year to February 2006. The company achieved an 18% increase in revenue to $2,98 billion, significant growth in operating profit to $69m and its headline earnings rose by 650% to 26.91 US cents.
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Datatec is a leading international IT and networking, systems and services company listed on the JSE Limited in South Africa, with operations in many of the world's leading economies. Datatec's international operations contribute in excess of 95% of the Group's revenues mainly from the US and Europe.
The Group positions itself as an Information and Communications Technology (ICT) holding company focusing on investing in and developing lines of business which are complementary to its position as a provider of networking and communications products, networked IT Integration solutions and services and strategic and technical consulting.
The Group employs over 2 500 IT and communications networking professionals around the world in over twenty countries in three principal subsidiaries:
* Westcon, one of the world's largest value added distributors of IP networking, convergence and security products, sourced largely from global market leaders Cisco, Avaya and Nortel;
* Logicalis, an international provider of enterprise IT and networking systems delivering integration solutions and services based on strong strategic alliances with market leading vendors such as Cisco, HP and IBM; and
* Analysys Mason, a leading international telecommunications, convergence, IT strategy and management consultancy providing business solutions to public and private sector organisations world-wide.
The Group's Other Holdings comprise Westcon AME and OnLine, mirrors of Westcon's operations in the US but with the focus on markets in the Middle East and Africa, and RangeGate, a specialist mobile solutions provider to blue chip companies in SA.
African Legends Technologies
African Legend Technologies is owned by African Legend Investment Ltd, a Black-owned holding company. African Legend Technologies operates two subsidiaries, African Legend Indigo and African Legend Solutions.
African Legend Indigo was formed in April 2003 through a management buyout of the Enterprise Solutions business of MGX Technologies, with the support of ALT as a BEE partner. This division of MGX was profitable at the time. The value of the management buyout was R19 million, however all of this was funded by ALT and management was not required to invest any capital in the buyout.
African Legend Indigo was immediately positioned as a black-owned IT company with ALT as a 57.5% shareholder. Within six months, the company was one of the first IT businesses in South Africa to be accorded an A rating by EmPowerdex. African Legend Indigo provides IT solutions to the telecommunications industry, to financial services and to the public sector with its vendor partners Sun Microsystems, BEA, BMC Software, Remedy and Veritas.
African Legend Solutions was formed in 1999 through acquisition of Star Award Microsystems by African Legend Technologies in 2000. The company's business model was built around the concept of "design, build and operate". They provide their client base with solutions design including strategic and business process consulting, project services, change management and programme development, solutions development including implementation and support of a range of business applications such as ERP, DMS, Business Intelligence and solutions support including software configuration and enhancement, software training and technical support. African Legend Solutions provides solutions to the South African public and private sector.
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