Local business intelligence company Harvey Jones has been discarded by UK parent Avisen because it was just too small, raising concerns in the market as to whether it will continue to exist.
Harvey Jones, which provides Microsoft business intelligence solutions, merged with Avisen towards the end of 2008. However, MD Keith Jones has now bought the company out and is busy restructuring and repositioning it in the local market.
Jones, a director of Avisen in SA, has bought the local Avisen from its UK parent, acquiring both Harvey Jones and IBM solutions company Inca as part of the deal. Rumours that Harvey Jones is in trouble are doing the rounds, but Jones will not comment on the operational health of the company.
Avisen's announcement about the merger in early 2009 indicated that the marriage between the two companies saw Avisen's share price double from 5p to 10p. However, the company's share closed at 5.88p on the London market last night.
In 2009, Avisen said the merger “brings significant benefits to both companies, including enhanced economy of scale, greater sales revenue and market share in its market, broadened diversification and accelerated growth prospects. It also gives both parties access to a complementary skills base.”
Not big enough
Harvey Jones, which was founded in 1997, claims on its Web site to be the leading BI solutions provider on the Microsoft platform in Africa.
Two weeks ago, however, Avisen said it was selling the South African unit because its financial performance “is not material”. Avisen will receive 3.5 million shares in return for the sell-out, valuing Avisen SA at £205 800.
Avisen's sale follows on a March announcement in which Avisen said it was buying out Xploite for £11.38 million, a move that is expected to allow Avisen to strengthen its position in the business and technology consultancy sector.
Announcing the disposal of Avisen SA, CEO of the UK-based company Marcus Hanke said: “The merger with Xploite has allowed us to create and pursue a new business plan, which will see us concentrate on the ever growing market opportunities in the UK.
“The disposal of the South African business is a consolidatory step towards Avisen's future aims and ambitions,” Hanke added.
Jones says the buyout has been wrapped up, and he is just finalising some legal matters, which he hopes to complete by the end of the week. As a result, he says, he cannot comment on the local operation due to confidentiality agreements.
However, Jones confirms that some staff members have been let go, but he will not quantify how many employees have been retrenched. He says he is busy restructuring and repositioning the company, and will provide more clarity once everything is wrapped up.
Concerns
An industry source has raised concerns that Harvey Jones is imploding, commenting that the company's new BI approach has failed and the company has not been able to secure new international business. The source also claims that Harvey Jones is downsizing substantially.
Another market commentator, who asked not to be named, says it is likely that, without Avisen's backing, Harvey Jones is so insubstantial that clients may consider changing providers.
The commentator adds that clients leaving in droves could result in Harvey Jones' demise.
According to the 2009 merger announcement, Harvey Jones has deployed solutions directly and with its partners at clients such as Absa, Metropolitan, Saambou, Edcon, the South African Revenue Service, the South African Broadcasting Corporation, Beers and First National Bank.
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