Dual-listed Datatec is pondering the possibility of expanding the combined Comztek and Westcon SA business into North Africa and the Middle East.
On Friday, Datatec said it would buy the pan-African distributor for R88 million from Mustek and other shareholders, and merge it with its local Westcon unit. The deal will create SA's largest value-added distributor with revenue of more than R2.6 billion.
Datatec CEO Jens Montanana says the unit earns between $60 million and $70 million - R534 million to R623 million - from African countries outside of SA and the deal doubles its African business. Comztek supplies computing equipment to 26 countries in Africa, with operations in SA, Namibia, Zambia, Kenya and Mauritius.
Montanana says Datatec would like to do more business in Asia and sees the company as "pretty much served" in Africa post the conclusion of the deal, which should take about three months to wrap up.
The merged entity could potentially expand into North Africa and the Middle East, says Montanana. He says it will "basically just keep going north".
Montanana says buying Comztek doubles Westcon's continental business and gives the entity critical mass. He says it extends and deepens Westcon's presence on the continent, while dovetailing with Westcon SA's local offerings.
Datatec is not buying Comztek to trim costs, or to bulk up its market share, but rather because there are client and revenue synergies as there is very little overlap, says Montanana. He says Comztek will continue to run as a separate brand under Westcon SA.
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