Reunert today announced it has increased its share in Siemens Telecommunications (Sietel) from 27.5% to 49%. Reunert will purchase the 21.5% Marconi shareholding for a cash consideration of R279.5 million in a deal which values Sietel at R1.3 billion. The acquisition is effective immediately.
As part of the agreement, international parent company Siemens, which currently holds a 51% equity stake in the local subsidiary, has been granted a call on 9% of the 49% shareholding for a 180-day period.
News of the deal comes five days after Reunert announced it was acquiring an additional 37.2% in Nashua Nedtel Cellular from Nedcor, giving it 95% holding in the cellular service provider.
The Nashua Cellular deal was worth R224 million and together with the Siemens deal, Reunert has taken a substantial dip into the R580 million cash reserves reported in its results for the year to September.
Reunert commercial director Gerrit Oosthuizen says the company won`t borrow money to pay for either acquisition, but will not look at further acquisitions in the short-term that will require alternate financing.
"It is a close call on the cash, but we have sometimes come under criticism for not having enough debt. Reunert is a very cash generative company and this will not put a strain on the business," says Oosthuizen.
"Its [Siemens] order book is at a high level after being awarded the Cell C contract to supply the entire network infrastructure for the third cellular operator as well as Eskom Easitel`s fibre optic backbone," says Reunert CEO Gerrit Pretorius.
Easitel is a contender for the second fixed-line telecommunications network operator and Pretorius says the deal will enhance Reunert`s earnings for financial year 2002.
"Much of Sietel`s business is based on a huge installed base, providing a high level of annuity income that underpins earnings," says Pretorius.
According to Reunert, the Cell C contract was valued at $221 million and the Eskom deal at R400 million.
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