Dimension Data has announced its intention to acquire JSE-listed TCO Holdings.
This multi-million Rand move will significantly boost Dimension Data`s transformation to an end-to-end Information Technology (IT) solutions company, building on the synergies provided by TCO Holdings as SA`s top Microsoft Certified Solutions Provider.
Dimension Data Networking and TCO have already established a powerful and close working relationship, leveraging DDN`s Cisco and TCO`s Microsoft skills.
The deal also mirrors the recent formation of an international technology development and marketing alliance between US-based networking giant Cisco and Microsoft Corporation. Dimension Data is Cisco`s major partner in SA, while Microsoft SA acknowledges TCO as having more skills relating to the Microsoft platform than any other company in this country.
According to Dimension Data chairman Jeremy Ord, the acquisition of TCO will also enhance the Group`s focus on its Managed Online Network (MON) offerings as TCO is equipped to provide services and skills which Dimension Data currently lacks. The Dimension Data MON was established to provide remote network support and management to corporates. This is in line with global trends.
"The combined services Dimension Data and TCO will be able to provide will be unparalleled in South Africa," he adds.
And as part of the Dimension Data team, working alongside other Didata companies such as DD Networking, TacTech, Advanced Cabling, The Internet Solution, and SPL, TCO will create opportunities to work with EDS`s Renascence Business. This is geared to provide an end-to-end IT solution to corporates.
Ord says Didata intends acquiring TCO`s entire share capital, swapping one Didata share for nine TCO shares.
Major TCO shareholders, comprising management and staff, a private investment consortium, and the South African Railway Workers and Harbours Union (SARWHU) will thus become Dimension Data Shareholders.
"SARWHU will be the first union with a sizeable shareholding in and a close working relationship with Dimension Data," he adds. .
Commenting on the synergies between TCO and Dimension Data, Ord notes that to date most of Dimension Data`s networking expertise was directed at the Cisco internetworking environment with limited resources in the Microsoft local area networking and desktop platform arena.
"This means Dimension Data effectively handles a corporate client`s networking requirements up to its exterior wall. With TCO`s skills, we will be able to extend this solution to the desktop," he explains.
Established as a focused Office World business unit within the Siemens Nixdorf stable some three years ago, TCO outsources Microsoft certified engineers and consultants to the business market. Services offered are aimed at enhancing business processes within the Microsoft and other client-server operational environments.
When Siemens Nixdorf International (SNI) changed its focus earlier this year, a move which would have impacted TCO`s future, the Office World team broke away to establish TCO. One month later - on July 1, 1998 - TCO was listed.
James Murray, MD of TCO Holdings, points out that in the rapidly changing arena in which Microsoft operates, the key to success is an ability to stay ahead of the market. "We have to be able to move fast, to be entrepreneurs and this wasn`t possible in the new SNI set-up.
"While TCO has been approached by several blue-chip IT companies in recent months, Dimension Data`s entrepreneurial culture dovetails with ours.
"It was a difficult decision to give up our `independence` after such a short period and join the Dimension Data fold. However, from a business and longer-term growth perspective it makes perfect sense," he says.
According to Ord, TCO`s earnings are expected to be significantly exceed those predicted in its prelisting statement.
"With its entrepreneurial drive, outstanding management and technological skills, the rapid growth of the market in which it operates, and its synergies with the Dimension Data Group`s networking businesses, we regard this acquisition in a similar light to that of The Internet Solution," Ord concludes.
Editors Note
TCO`s customer base - which always included blue-chip corporations such as SAB, Standard Bank, IBM and Sun International - has grown significantly to include Transnet, Spoornet and Portnet; ABSA, Nedcor, SAA, Sasol, Citibank, Vodacom, Corpgro, Momentum, Volkswagen, Hyundai and Dimension Data.
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