Listed outsourcing company EOH has bought TSS Managed Services for R130.5 million in cash and shares as a springboard into the public sector.
EOH has historically grown through a strategy of driving about half of revenue gains through organic growth, and the rest through acquisitions, a trend that is set to continue.
The company has set itself the target of achieving R4 billion revenue in the 2014 financial year. For the year to July 2010, revenue was R1.7 billion.
Expanding into the public sector is an area of growth the company has previously indicated it wants to tap into. EOH has not historically been strong in providing government with services.
Its purchase of TSS, announced this morning, is in “line with its strategic decision to strengthen its managed services in the public sector,” the company explains.
EOH CEO Asher Bohbot says the public sector is a major part of the economy that EOH cannot ignore. “We want to contribute our piece in supporting government's imperatives in service delivery.
“TSS has built impressive service delivery capabilities within the public sector and will thus add significant value to EOH,” says Bohbot. It is a “sizable” managed services business that has a country-wide footprint and a presence in the public sector, which attracted EOH, he adds.
The deal will also accelerate EOH's transformation as buying TSS gives it a staff complement that is more than half black, says Bohbot.
TSS was established in 2000 and has over 620 employees. It offers ICT infrastructure managed services, which includes end-user support, server management, network management, storage management, security management, infrastructure deployment, and end-user training.
TSS MD Jehan Mackay says: “EOH will provide the credibility and financial strength needed to compete effectively in the managed service space.” TSS will be able to compete more aggressively as an EOH company, he adds.
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