ICT skills development and training solutions group Torque IT has been bought by the Kelly Group, for an amount "not exceeding R37.85 million".
In a statement to shareholders this morning, Kelly said the move would strengthen its presence in the high-growth IT outsourcing and permanent placement sectors.
Kelly Group CE Grenville Wilson says the group had identified the ICT sector as a target market and the acquisition of Torque IT would support its growth objectives in this sector.
The acquisition, he says, would provide it with a source of potential candidates that are honed by the Torque Career Campus through learnerships and/or internships. It would also complement a new ICT division created by the group's flagship brand, Kelly.
"The acquisition also brings with it a strong management team and, as Torque IT is 55% black-owned, will further enhance the Kelly Group's already high BEE rating. In addition, there are key customer overlaps which offer synergistic opportunities," Wilson notes.
"Skills development is an immediate adjacent to recruitment and placement. We realised that we are weak in the area of IT and Torque IT, in terms of its organisation and culture, is a great fit for us."
Wilson says the Torque IT brand will be retained and nurtured, in accordance with Kelly's multi-brand strategy, which sees various operating companies under the Kelly umbrella. "We want to own the number one brand in every sector in which we operate, hence the Torque IT deal."
Torque IT provides high-level technical training services to blue-chip corporates and the public sector on Cisco, Microsoft, VMware, Novell, Sun and other major systems through its wholly-owned subsidiary Torque Technical Training.
The group is made up of three principal business operations: Torque Technical Training, Torque Career Campus and Torque Africa.
Torque Career Campus, one of the first providers to be accredited by the ISETT SETA, offers customised training services to school-leavers seeking employment in the ICT industry.
Happily married
According to the Kelly Group, the acquisition consideration will be calculated in accordance with a formula based on the audited financial statements of Torque IT, for the 12 months ending 30 November 2008.
The acquisition consideration is subject to an adjustment based on Torque IT achieving free cash flow warranties for the years 2008, 2009 and 2010, provided that the total consideration payable by the Kelly Group in relation to the acquisition shall not exceed R37.85 million. The acquisition consideration shall be discharged in tranches, in a combination of cash and shares.
Torque IT chief executive Mthunzi Mdwaba says the company's acquisition by the Kelly Group would have major benefits for all stakeholders, including its staff, its diverse portfolio of clients, its partners and the community.
"Torque IT is the biggest ICT skills factory in Sub-Saharan Africa and we could not have asked for a better home than the Kelly Group, given the company's focus on human capital development.
"The marriage will greatly enhance our joint ability to unlock potential and promote skills development in the skills-starved ICT sector. ICT plays a crucial role in the smooth running of any business and we hope to use skills development in this sector as a tool to help drive transformation in our country."
Mdwaba is also one of the vice-presidents of Business Unity SA and the outgoing chairman of its transformation policy committee.
Wilson says the acquisition includes Mdwaba, whose ultimate role in the company is still being negotiated.
The finalisation of the deal is subject to Competition Commission approval.
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