London- and Johannesburg-listed Datatec's R97 million offer to buy out Comztek expired yesterday, with the future of the deal uncertain as Datatec is still busy with due diligence.
The results of Datatec's research into Comztek could be a sticking point, because Mustek is unlikely to sell its 42% stake until it has an unconditional offer on the table - and the bid can only become unconditional once the due diligence is wrapped up.
Datatec issued a voluntary statement almost a month ago, saying it was in talks to buy out Comztek, and Comztek's management and shareholders, apart from Mustek, had agreed to the bid. Mustek acquired the Comztek majority stake when it helped management purchase the company in 1999.
Comztek was established in September 1999, but it was initially formed in 1995 as Comzlink, a subsidiary of Centera, which was owned by Siltek and Q Data. Four years after it was formed, Leen van der Bijl and current Comztek MD Paul Conradie bought out the distributor with Mustek's assistance.
The deal has been plagued with accusations that Datatec's proposed purchase of Comztek came about because Comztek wanted to stave off an alleged hostile takeover by Mustek. Mustek, however, has denied it is being hostile.
No clarity
Datatec CFO Ivan Dittrich says the company is still busy with due diligence at Comztek. “We have made good progress on the due diligence and expect this process to be completed shortly.”
Conradie says: “We are all just waiting for the process to finish, and then everyone will decide what the next step will be.” He explains a new offer, or an extension of the expired bid, hinges on the results of the research.
If Mustek agrees to sell its stake, the sale to Datatec would end an 11-year marriage, during which time Mustek never fully incorporated Comztek into its operations. However, if Mustek does not sell, its decision could scuttle the deal.
Mustek CEO and founder David Kan says he has not had any communication from Datatec and is waiting for a clearer offer from the company, before deciding whether to sell. Kan adds that he will not accept an offer that includes conditions that are out of his control, such as profit and revenue targets.
Datatec wants to add Comztek, a South African-based distributor of networking, security and other hardware and software products, to its local Westcon operations. Datatec said at the time of its initial announcement that these products are “highly complementary to the activities of the Westcon Distribution business of Datatec in SA”.
The distribution company also has operations in the rest of Africa, which can be added to Westcon's existing pan-African footprint to create a “strategically significant player across many African markets”, Datatec said.
Comztek operates in SA, East Africa, Namibia and Zambia, and provides products in several categories, including consumer electronics, security, software and services, for the data centre environment. It turned over R789 million in the year to June.
Westcon is Datatec's largest subsidiary. The company distributes converged communications solutions, focusing on voice, security, mobility, storage and power. It has operations in several countries in East and West Africa. Last year, it accounted for 69% of Datatec's $3.7 billion revenue.
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