After this morning`s surprise announcement of Nasdaq- and Toronto-listed DataMirror`s hostile takeover bid for Idion Technology Holdings, Nigel Stokes, chairman, president and CEO of DataMirror, admitted his company had not performed a due diligence on Idion`s local operations.
"We may look for an investor, [or] we may sell the company. We haven`t completed a due diligence on the local operations and until we have, we will keep our options open," Stokes told a press and analysts conference in Johannesburg this morning.
DataMirror caught local investors and Idion staff by surprise this morning when it announced its offer to acquire the entire remaining share capital of JSE-listed Idion.
It is clear from this morning`s briefing that DataMirror is only interested in Idion`s US company, Vision Solutions, which operates in the same market space and geographical region as the Canadian company.
Stokes told the conference that the Idion management of Vision had failed to deliver on promises.
"It has been a case of over-promising and under-delivering," said Stokes.
He also pointed to Idion management`s track record since it acquired Vision, saying that R100 invested two years ago when Idion had acquired the US company would now be worth only R3.
Stokes is confident shareholders will accept the cash offer of 65c per share, valuing Idion at R73 million, and said this is "certain value" for the shareholder, while Idion`s present management could offer nothing more than hope of recovery.
DataMirror acquired 16.4% of Idion shares on the open market, at an average price of 44c per share.
Its current holding will mean DataMirror would only need little more than 34% to gain majority shareholding of the company, but Stokes believes the majority of shareholders will accept the offer.
Stokes admitted he had been in contact with Idion management for over two years, but said the company had been unwilling to consider any offers for Vision.
DataMirror and Vision go head-to-head for business in almost all their markets, and Stokes said the lure of additional customer base sparked DataMirror`s interest in its competitor.
The only other competitor in the high availability market is Lakeview. Stokes noted that should the acquisition take place, DataMonitor would control two-thirds of the market.
According to Stokes, this may have been why Idion management refused to have any dealing with DataMonitor regarding the possible sale of Vision Solutions.
"No one likes a competitor performing a due diligence on your company, but I have been in contact with Idion, and they have been aware of our interest for over two years now," commented Stokes, adding that he chatted with Idion CEO Nicolaas Vlok over the weekend.
"We went this route (takeover bid) because I believe it`s difficult for investors to make a decision without a tangible offer on the table," said Stokes.
While the future of the local operations remains unclear, Stokes didn`t mince words when it came to the local listing. He said that should DataMirror get shareholder approval, allowing the deal to go through, Idion would be de-listed from the JSE.
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