Tellumat buys stake in Denel unit

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Cape Town, 06 Dec 2007

Tellumat Electronic Manufacturing has bought half of the printed circuit board manufacturing plant from Carl Zeiss Optronics, which is closely linked to SA`s armament manufacturing group Denel.

Rasheed Hargey, Tellumat CEO, says the acquisition, called EMCEE for now, will give his company the ability to have a manufacturing presence in Gauteng, as opposed to having it centralised in Cape Town.

He says the deal means Tellumat will be able to add to its manufacturing bottom line as the new facility complements the manufacturing operations in Cape Town.

The deal was concluded in October, after Denel issued a tender for the purchase of the printed circuit board plant in March. Tellumat officially took over management in October. No price has been disclosed for the deal.

Carl Zeiss Optronics was formerly Denel Optronics, and is now a joint venture between the German company and Denel, in a 70:30 partnership.

Tellumat entered its joint bid with a majority black-owned consortium led by Norman Clark, an ex-GM of Denel Optronics, says Murison Kotz'e, head of Tellumat Electronic Manufacturing.


Hargey says this means EMCEE has a 60% broad-based black economic empowerment (BBBEE) rating, as Tellumat already has a level four rating in terms of the Department of Trade and Industry codes. A level four means that for every rand a customer spends with Tellumat, that rand is recognised as being from a BBBEE supplier, thus recognising the company as a "superior contributor".

Hargey says the new company will continue to service its existing customer base, of which Carl Zeiss Optronics is the largest client.

The acquisition comes six months after Tellumat`s acquisition of Rhomco Manufacturing, which boosted Tellumat Electronic Manufacturing`s capacity, equipment base, staff, management expertise and customer book.

Tellumat`s total throughput for one of its customers exceeds 40 000 circuit boards per month. This, Hargey says, gives the South African market a cost-effective, high-capacity alternative to cheap mass production in the Far East.

Tellumat is an unlisted company with a 32% black shareholding, 31%-owned by Plessey, 17% jointly owned by banking groups Nedcor and Cadiz, and the remaining 10% by the management trust.