Listed IT business UCS Group (UCS) today announced the acquisition of the business of Computer Software Consultants (CSC) by wholly owned subsidiary Destiny Electronic Commerce (Destiny) as a going concern with effect from 1 June 2008, subject to conditions precedent.
The initial purchase consideration of R67.605 million will be settled through the subscription of ordinary shares in Destiny by UCS and CSC management for R10.605 million, a loan to Destiny from UCS for R4 million and the balance of R53 million through third party debt financing.
UCS through wholly owned subsidiary Computerkit will subscribe for 70% of the Destiny ordinary shares and CSC management for 30%, financed through loans provided to management by UCS at current commercial rates.
The initial purchase consideration may increase in terms of profitability targets set for CSC to achieve in the 2009 and 2010 financial years. The total purchase consideration is, however, capped at R98.1 million.
John Bright CEO of UCS Group commented: "In 2007, we announced our intention to set-up a value-added services division as part of our strategic objectives. The CSC transaction represents the foundation of the value-added services division and the commencement of a specific focus on servicing a portion of the financial services sector to complement and assist in diversifying our current software, solutions and services offerings to the retail and government sector.
"The CSC business enhances UCS's ability to provide its customer base (retailers, government and banks), post the acquisition, with seamless point-of-sale and payment solutions together with other integrated value-added services.
"CSC management will continue to be responsible for the day to day running of the business, bringing with them invaluable experience, relationships and expertise which will most certainly impact positively on the UCS Group and its value-added services strategy into the future."
The CSC business and the Destiny switching business will operate alongside one another as separate divisions within Destiny.
The final remaining condition precedent is the preparation by CSC of an effective date balance sheet and related schedules agreed to by the parties.
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