In a significant move designed to strengthen its position as the leading networking integration company in Europe, the Chairman of PQ Holdings, Mr Roux Marnitz, announced that his group has acquired control of Comparex (one of the leading IT companies in Europe) by increasing its shareholding from 40% (which it acquired in 1996) to 75%. The balance of 25% remains with the large German chemical group, BASF.
Commenting on the acquisition Marnitz said: "In Comparex, PQ Holdings is obtaining an organisation with a blue chip European customer base, proven skills and capabilities in marketing and supporting large systems as well as an organisation which has started its diversification to a systems and network integrator.
PQ Holdings is already one of the most successful networking companies in Europe through our subsidiaries Telemation in Germany, ComTech in Belgium and Luxembourg, Datelec in Switzerland and Nomea in France. Combining the excellent networking skills of these companies with the entrenched position which Comparex has with European customers will put PQ Holdings in an unassailable position as network and systems integrator on that continent.
"Bearing in mind the very high cost associated with building a pan European sales and support organisation and the immense value of a large customer base, the acquisition of a profitable Comparex with a promising portfolio and excellent blue chip customer base throughout Europe represents an extremely attractive transaction for PQ Holdings.
"Now that we have acquired management control of Comparex we intend to accelerate the diversification of Comparex from a mainly large systems supplier to a systems and networking integrator similar to the diversification of our South African operations over the past five years. In this process we expect to build on the current Comparex base of systems and network integration business which increased over the last three years from less than DM20 million in 1995 to an expected DM75 million in 1998."
This latest acquisition by PQ Holdings establishes the company as a significant participant in the IT industry in Europe and makes it the undisputed leader amongst South African based companies expanding abroad. The purchase of control of Comparex means that PQ Holdings now has operations in 19 countries in Europe and Eastern Europe, including Poland, the Czech Republic and Russia.
Group turnover is likely to exceed R6 billion next year. PQ Holdings will derive more than 60% of its earnings offshore immediately and more than 80% within two years. This further enhances PQ Holdings as a Rand hedge share, the importance of which, given the recent experience with the South African currency, cannot be over emphasised.
The parties agreed that the purchase consideration would not be disclosed. Ken Evans, finance director of PQ Holdings, said "I am at liberty, however, to state that the purchase represents an attractive transaction for PQ Holdings shareholders. The deal will be earnings enhancing, since the price:earnings ratio at which we bought the additional shares is less than 10.
At the same time, BASF have achieved their objective of reducing their involvement in the IT sector, which is not part of their core business, and in transferring control of Comparex to a respected and long standing associate and partner". Evans confirmed that the purchase consideration would be financed from the considerable internal cash resources of PQ Holdings.
It is considered significant that BASF has decided to retain a shareholding of 25% in Comparex. "This illustrates BASF`s ongoing interest in Comparex". We are delighted that Mr Max Dietrich Kley, finance director and member of the management board of BASF, has accepted our invitation to become Chairman of the Supervisory Board of Comparex" said Marnitz. "This is the most senior member of BASF yet to serve on the board of Comparex and signifies strong commitment by BASF to the company, its employees and customers."
In a simultaneous move, it has been decided that the name of PQ Holdings will be changed to Comparex Holdings Limited at the next general meeting of shareholders. Commenting on the name change, Rian du Plessis, director of international finance, said: "Comparex is a highly respected and widely recognised name in Europe. Since more than 80% of the revenue and earnings of our group will in due course be derived internationally, it made sense to acknowledge the international character of our business by adopting the internationally recognised name".
Du Plessis continued: "Although our group will retain its primary listing on the JSE, it is our intention to seek a listing on a European exchange within the next twelve months. The name Comparex is much better known in Europe than PQ Holdings and therefore the name change makes sense, also from the listing point of view".
The African operations, in which PQ Holdings has an interest of 50% minus one share, will continue to be known as Persetel Q Data Africa.
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