EOH sells off Syntell for R211m to service debt
JSE-listed technology services company EOH’s subsidiary EOH Mthombo has sold its unit Mars Holdings and associate companies – together known as Syntell – to a consortium led by the current executive directors of Syntell, for a consideration of R211 million.
In a statement, the JSE-listed company says the management consortium comprises Mark Chewins, the current CEO of Syntell; Ametje Rist, the current CFO of Syntell; Mike Hellens, a current executive director within Syntell; as well as companies Newport Investments and Reonet.
EOH says the transaction is in line with its stated strategic intent to sell non-core assets as it seeks to right-size the group and deleverage its balance sheet.
The announcement comes a week after ITWeb reported that EOH is liquidating its business unit Nextec Advisory.
Nextec Advisory is also a wholly-owned subsidiary of EOH Mthombo and an individual legal entity within the iOCO grouping of the EOH Group.
Syntell was acquired by EOH in 2016 to provide better growth opportunities by accessing the EOH customer base and the shared services and resources of a larger listed group, says the firm.
EOH notes Syntell requires significant capital investment in the coming years in order to develop key technologies to exploit market opportunities.
“Given the limited capital available to EOH until such time as the balance sheet is deleveraged, coupled with the extensive knowledge and access to capital that the management consortium possesses, the value of Syntell to EOH is better optimised through a sale to a new shareholder,” the company says.
Furthermore, it adds, the execution of the transaction provides EOH with the opportunity to extinguish the last sizeable vendor for acquisition liability on the EOH balance sheet.
The company notes the cash consideration received by EOH will primarily be utilised to reduce debt, which is consistent with EOH’s objective of creating a fit-for-purpose capital structure.
The remainder of the proceeds will be utilised for the working capital requirements of EOH.