Mustek, a distributor listed on the JSE, has completed the purchase of a 26% stake in former ConvergeNet entity Sizwe IT Group.
This follows ConvergeNet's restructuring announced last July, when it said it would sell several units, shut down its head office, and retrench staff as a result of its "deteriorating financial performance" due to "excessive costs and a lack of strategic focus".
Mustek paid R15.1 million, a fraction of the R40 million ConvergeNet paid just a year ago for a quarter of the company. Mustek will loan R6.7 million to Zaloserve, which is Sizwe's ultimate holding company.
CEO David Kan explains its minority stake opens opportunities to work with Sizwe on cabling projects, which is one of Sizwe's "big legs". He adds Sizwe already has a large service network, which is an area Mustek has been working on, and its purchase gives it access to Sizwe's critical mass.
The listed distributor will also lend R7.97 million to black-owned Omni Capital as part of its enterprise development initiatives, it says. Mustek reported revenue of R1.98 billion in the six months to December, up from last year's R1.8 billion, and ended the period with R238 million in the bank.
ConvergeNet sold its entire Sizwe stake, which it had held as a discontinued operation, for R120 million. The group continues to be loss-making, as its operating loss from continuing operations grew to R98.7 million from R68.1 million in the year to August.
Taking discontinued operations into account, its entire loss leapt from R50.3 million in 2012 to R226.3 million.
Post Sizwe's sale, the level two empowerment company said it would replace CEO Tim Modise with Hanno van Dyk, who has a stake in the entity. Sizwe was established in 2001 by Ben Kekana and Van Dyk.
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