Idion Technology Holdings has sold its South African business, Idion Solutions, to CS Holdings for an undisclosed sum.
The move has incensed Nigel Stokes, CEO of Canadian group DataMirror, whose offer to buy to group at 180c a share closes tomorrow.
"If the regulations permit Idion to sell the division in the midst of an open offer, the regulations need to be changed," he says. "They need shareholder approval, and guess who is the largest shareholder."
However, Idion CEO Nicolaas Vlok, says the deal is too small to warrant shareholder approval.
"I`m not going to comment on Nigel Stokes`s reaction," he says, adding that DataMirror is merely a minority shareholder. He says the sale was undertaken in the interest of Idion shareholders and is also good for staff and clients.
SG Securities MD David Shapiro agrees that the announcement did not necessarily breach any investment rules as the sale was probably less than 15% of Idion`s assets.
He adds that no cautionary announcement was necessarily needed either. "A cautionary announcement is really only needed when you cannot keep the market from guessing and in this case they managed to do so."
He says the sale would probably not affect Idion`s share price and that it was probably part of their strategy to focus more on their international operations.
"I can`t imagine Idion Solutions being a large part of Idion`s operations," he says.
Shapiro says DataMirror is in effect a minority shareholder and will have to go along with the decision.
He says the Idion Technology Holdings board has decided to focus on its investment in the US-based Vision Solutions. While Vision is a software developer, Idion Solutions` business is mainly in the services arena and fits perfectly in CS Holdings` business, Vlok says.
Vlok would not comment on talk that other companies had also been interested in acquiring the Idion Solutions business.
CS Holdings CEO Annette van der Laan says the acquisition will add value to CS Holdings` existing skill base and service offering and should contribute approximately 4% to the Company`s annual revenue.
Director Dave Vink says the deal is in line with CS Holdings` existing business strategy. "Although we already have a significant Microsoft development capability, this acquisition will accelerate our growth into the Microsoft arena. The complementary nature of our skill sets means the integration of Idion Solutions into the CS Holdings stable will be relatively painless."
The Idion share lost 10c or 5.88% to close at 160c on the JSE today, while CS Holdings closed 2c or 2.3% down at 85c.
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