DiData sells Proxicom

By Iain Scott for Dimension Data South Africa

Johannesburg, 15 Mar 2004

Dimension Data has sold US Web design and Internet consulting business Proxicom, the company for which it outbid Compaq in 2001.

DiData paid $448 million, or $7.50 per share for Proxicom, outbidding Compaq by 30%, at a time when DiData was actively seeking to expand in the US in the last heady days of the Internet bubble.

The transaction value was ultimately calculated at $376 million owing to the fact that Proxicom had cash of $72 million on its balance sheet.

Just how much things have changed since the Internet bubble burst is shown by the fact that the business is now being sold to an affiliate of private investment firm Gores Technology Group for such a small amount that the group is not obliged to disclose the sale price.

It says the deal has no material effect on the DiData balance sheet or income statement for the current year.

Los Angeles-headquartered Gores specialises in buying beleaguered IT companies and turning them around. Gores president of operations James Bailey says Proxicom will be used to advance the company`s strategic initiatives in the IT services sector.

Proxicom was fully written down in DiData`s financial statements for the year to September 2003.

The Dimension Data share was trading at 470c on the JSE early this morning, up 3c or 0.64% from Friday`s close.