In a determined bid to increase its information security services footprint, JSE-listed IT services and solutions specialist Faritec has acquired Ubusha Technologies for R26 million, with effect from 1 March 2008. In terms of the deal, Faritec will pay R23 million in cash and issue Faritec shares to the value of R3 million.
Simon Tomlinson, CEO of Faritec, says by bringing Ubusha into the Faritec stable, the company has effectively leapfrogged its entry into the specialised identity and access management arena.
"The combination of traditional security information and event management with identity and access management will position Faritec as the leading provider of managed security and identity solutions," he says. "In addition, the identity and access management competency of Ubusha complements the Google solution offering."
Ubusha is the number one provider of Novell identity and access management solutions to the financial, telecommunications and public sector markets, and boasts annual revenue of R22 million in the services and solutions space. The company has grown its business by 55% over the past year and has an operating profit margin in excess of 25%. Had this business been incorporated for the six months ending December 2007, it would have increased Faritec's operating profit by 12%.
As a part of the transaction, Faritec will also acquire a 30% stake in Linux System Dynamics, a leading player in the Linux and open source software (OSS) services space.
The cash portion of the transaction was raised through the recent securitisation-funding programme that Faritec entered into. In terms of the programme, Faritec took a strategic decision to refinance its current short-term debt facilities with longer term secured finance in order to fund future growth and acquisitions.
According to Logan Hill, Business Unit Manager, Security and Availability Solutions, Faritec, the acquisition will bolster the Faritec security offering and create one of the most comprehensive client reference lists in the provisioning of identity and access management solutions in the South African market.
"There are client synergies that will be leveraged by integrating existing identity and access management solutions into the Faritec Security Operations Centre," Hill says. "Furthermore, there are strong ties and synergies within our mutual target markets: telecommunications, financial services and the public sector. The acquisition will enable us to provide unrivalled governance and compliance services to the African market."
Ubusha's team of 22 sales and solutions staff will be integrated into Faritec's Security division as an identity and access management consulting competency within the company's existing security structure. Marius Agenbag, MD of Ubusha, and his immediate management team, will join Faritec's Security management team.
"Together, they will be involved in delivering the committed numbers for identity and access management, and for contributions to the further growth and integration of the two businesses with a view to positioning Faritec as the leading security and identity management company for the telecommunications, public and financial sectors," says Tomlinson.
"The acquisition of Ubusha by Faritec will enable our customers to benefit substantially by having access to the more sophisticated and holistic solutions that result from the combination of the entities, while at the same time still enable them to experience the consistently high levels of service they are accustomed to," concludes Agenbag.
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