Lexmark International says it has signed an agreement to acquire its sole local distributor, Venture Computer, from the company`s directors.
[VIDEO]Lexmark acquired a 10% stake in the company when the distribution deal was first established in 1996, in what Venture describes as a show of commitment in the company at the time. It now expects to conclude the deal to buy the remaining portion by October, although a due diligence investigation has yet to be concluded.
The value of the deal has not been disclosed, but Venture estimates that it is among the top three local non-listed IT companies in value. The company estimates that it ships between 70 000 and 75 000 printers per year.
Lexmark says the deal is unique in its six-year history as a listed company, as it normally starts on-shore businesses from scratch in target markets.
Eamon Ryan, VP of the Lexmark EMEA business products division who is in the country for the announcement, says only caution prevented a similar approach in SA.
[VIDEO]"SA has matured as a market," he says. "Before, we looked at SA with a little bit of ignorance, with a view on economic and social stability." Events in the last five years have proven positive, and he says Lexmark recognised some months ago that the time had come to move in and set up house.
He also believes Lexmark has matured as a company in the past five years and now has the confidence to make such an acquisition.
Venture, which will change its name to Lexmark International South Africa, says the deal holds promise for customers and peril for the competition.
"We now have added thrust, although our objectives have not changed," says executive chairman Gary Combrink. "There is much more value in going to large corporate clients as Lexmark and not as Venture."
[VIDEO]He also expects greater access to Lexmark resources as a subsidiary and not a distributor.
Venture MD Mark Hiller also has nothing but praise for the deal, saying it strengthens the mutual dependence that has always existed between the companies.
"I don`t see it as a loss of independence," he says. "I don`t see it as a compromise. I see it as a strengthening.
"With the deal concluded, the future may see Lexmark SA spread its wings further up Africa, into waters uncharted to Lexmark."
Hiller says Lexmark holds 6% of the SA laser printer market share and aims to grow this to 15% over the next three years, as well as push into the corporate market with network laser printers and printer management services. The Lexmark brand is more prominent in the home and SOHO segment, with Venture claiming an 18% share for Lexmark inkjets.
"One of the areas on the continent we have not been as successful as we would like to have been is sub-equatorial Africa," says Ryan, even though the company considers itself reasonably well established in the French-speaking northern regions. "Having done nothing more than muse on this, I believe it may be a better strategy to approach the [sub-equatorial] marketplace through SA as opposed to London or Paris."
The Venture management will remain unchanged and the company expects no changes to its 170-strong staff.
Lexmark does not expect the deal to have a significant impact on its earnings, as income from Venture had already been absorbed in previous financial periods.
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