EOH unfazed by Reunert decision

By Iain Scott, ITWeb group consulting editor

Johannesburg, 19 May 2004

Reunert`s withdrawal from a possible bid for CS Holdings (CSH) has not changed Enterprise Outsourcing Holdings` (EOH`s) plans to make its own offer for the group, says EOH director Rob Sporen.

Reunert, which had been planning to offer 35c per CSH share, informed the CSH board this week that it had decided not to proceed with its bid. This came after EOH announced that it also planned to make an offer for CSH.

Reunert CEO Boel Pretorius has told analysts that the withdrawal came about because of a lack of agreement around certain issues, although Reunert does intend to retain its 31.7% stake in CSH.

Sporen says EOH`s intention to make a bid for CSH was not triggered by Reunert`s offer. CS Holdings is a close competitor and EOH had always followed it closely.

EOH did hesitate because of the fact that CSH is a larger company and EOH would not have dreamed about the acquisition two years ago, "but at the same time the opportunity made some sense for us and I think the industry is due for some consolidation. The other party being in or out never played a role. It may have crystallised things in the market, but it was never a consideration for us."

He says his company is in the process of gathering information from CSH, which will enable it to make a call. If a bid is placed on the table, it will be subject to a due diligence exercise. EOH plans to be able to make an offer within 10 days.

"I think the appreciation from all players is that there is a need for speed because a company cannot be left in a quandary like that, because then it becomes more and more difficult.

"We understand the business well, because we operate in the same sphere, but now we need to get enough information to understand the inside of CSH."

Part of the information gathering will enable EOH to determine what areas of CSH can be integrated with EOH`s operations, although some areas are not likely to be integrated directly. Sporen says while black economic empowerment is important to both EOH and CSH, it is still too early to determine what role CSH shareholder Worldwide Africa Investment Holdings will play.