Software solution and manufacturing company UCS is selling DiverseIT back to management, as the division is non-core.
Deputy CEO Dean Sparrow says the company was not an “appropriate asset”. He notes the group of companies that make up DiverseIT was intended to be a one-stop shop for the company's clients in the pharmaceutical retail sector.
Two years ago, UCS bought 51% of DiverseIT from the management team. The company is already involved in the pharmaceutical sector with CKS, which specialises in the provision of hardware, software and support services to the retail pharmacy and general retail markets.
It provides software and support services for more than 1 300 pharmacies and general retail stores, including seven of the eight largest pharmacy groups, retail hardware and general retail stores in SA.
DiverseIT provides consumables for use at point-of-sale, such as the slips that are printed to be stuck onto medication, said Sparrow.
However, DiverseIT was “not the strategic fit we were hoping for”. As a result, DiverseIT was identified as a non-core investment and will be sold back to management. Management had indicated an interest in purchasing back the company at about the same time as it was identified as non-core, says Sparrow.
The deal will put UCS in the position it was before the purchase, including a reversal of R300 000 in headline earnings.
UCS will get back 4.8 million shares from the management team and will receive R5 million for the 51% stake. It will also receive back 241 897 Argility shares at R1.50 each that were received by DiverseIT's management after Argility was unbundled two years ago.
The disposal is worth R12.6 million; with a share repurchase at about R1.50 a share, Argility shares and R5 million in cash. UCS says the deal does not require shareholder approval and should be complete by month-end.
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