Plans by communications group Altech to sell its problematic secure card manufacturer, Namitech, to French digital security company Gemalto has taken analysts by surprise.
Yesterday, Altech issued a statement saying that it had entered into an agreement with Gemalto to sell Namitech and that the deal should be concluded sometime in the new year, once approval has been received from the competition authorities.
"No price has been set yet. The statement was part of our obligation to ensure transparency with the employees of Namitech and the markets," an Altech spokesman says.
Namitech has annual revenue of about R200 million, employs about 450 staff and is the largest producer of pre-paid cellular cards in the country. However, the deal does not include its West African operations, located in Lagos, Nigeria
Altech`s share price was little changed by the news and, in mid-morning trade today, it was trading at a steady R49.40.
Namitech was bought by Altech five years ago for more than R500 million from Labat, and the South African group has tried several strategies to turn the company around. However, the company has struggled to restructure and remained an Altech management headache.
"I am surprised that Altech has decided to sell, because they have worked so hard on turning the company around. It could be a case of them receiving an offer that is too good to be true," says Irnest Kaplan, CEO of Kaplan Equity Analysts.
Another analyst, who asked not to be named, says that adding to the surprise is that Namitech has a strong positioning in the local market.
"It has built up a name for itself and is positioned well, so why sell it? It is not as though Altech needs the cash," the analyst says.
This analyst and Kaplan both agree some things that Namitech had geared up for had not happened yet. This includes the roll-out of "smart cards" by the banking sector, a project that has been in the works for more than five years.
Kaplan says the fact that the Nigerian operations are not included in the deal is interesting, as that is where the "real action" is set to happen, as mobile phone subscriber numbers are continuing to increase at a rapid rate.
"It could be a case that Gemalto has other plans for Namitech, but, without a price being announced, we are just shooting in the dark," he says.
Related stories:
Altech-NamITech merger approved
The benefits of multi-application smart cards
Altech`s Africard `attractive`
Share
