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Datatec acquires Westcon, a leading US-based VAD of high performance networking products

US$160M deal gives Datatec world-wide coverage with distribution capabilities across five continents
By
Johannesburg, 18 Jun 1998
Read time 3min 20sec

Datatec Ltd, the South African listed networking technology and services company, today announced the acquisition of Westcon Inc. a leading privately-owned US-based VAD of advanced networking products, with offices in 13 cities in the US, Canada, Asia-Pacific region and Australasia. As a result of this transaction Datatec has acquired 80% of the stock of Westcon Inc. in a deal valued in the region of $160M. Overnight, this acquisition propels Datatec into pole position as a major player in the US networking market and provides the company with a platform for further expansion in The America's, Australasia and the Pacific Rim. This acquisition therefore represents a major step forward in Datatec's stated ambition of building an international networking technology and services group that encompasses a global distribution capability. Westcon Inc., founded in 1985, is a major distributor of high-performance speciality networking products and services with headquarters in Eastchester, New York. With more than 400 employees and annual sales in excess of $500M, Westcon is a major force in networking distribution, whose channels include VARs, OEM vendors and Integration partners. The company specialises exclusively in the leading brands of LAN/WAN equipment from a select number of vendors and is the leading channel for Bay Networks, 3Com and Check Point. In addition to distribution, Westcon is a recognised leader in network training with 12 training centres in the US and Canada offering Novell, Microsoft and Lotus authorisation. Following this acquisition, Westcon's USA, Canadian, Australasian and Asia-Pacific operations will combine with Datatec's existing distribution businesses in the UK (Unity Distribution) and South Africa (Datatec Networking Distribution) to form a world-wide networking technology group with effective distribution capabilities across five continents. Concurrent with this transaction, Datatec will ultimately adopt the Westcon name across all of its equivalent distribution businesses to forge a global force operating in all the major continents of the world, with revenues projected to reach the US$1Billion mark by 2000. "Datatec's aim is to become a major international network technology and services group with the critical mass required to compete on an international scale. Value added distribution is an important component of this plan, because it provides us with access to the building blocks of the 'wired future', and the mind-share of the leading vendors that are shaping the future of the networking industry." commented Datatec`s Executive Chairman, Jens Montanana. "Increasingly the leading vendors are looking to channel partners with international coverage to bring their products to market. Datatec's market position is thus significantly strengthened through its acquisition of Westcon. In addition to greater international coverage, the combined sales volumes will allow us to negotiate stronger relationships with the world's leading manufacturers. In particular, Datatec's position with Bay, 3Com, Check Point and Lucent is immediately enhanced by the new combined total purchasing power and international marketing capability." he added. For Westcon, the acquisition brings the necessary working capital to realise its founder's plans of building the company into a US$1Bn international supplier of advanced networking products and solutions. The operation and strategic direction of the company remains the same and the existing management structure and Westcon brand will be retained. "Datatec brings an immediate expansion to our distribution capability," commented Westcon Inc's President, Roman Michalowski. "In addition to Westcon's USA, Canadian, Australian and Asia-Pacific operations, we are now associated with distribution holdings in England and South Africa. This transition will directly benefit both our resellers and vendor partners. As a value added distributor spanning five continents, we are now in position to provide world-wide coverage to sites in North America, Australia, Asia, Europe and Africa."

Editors Note: Datatec Ltd is South Africa`s fastest growing technology company and the country`s largest networking and software and Internet distribution and services group. Datatec was listed on the Johannesburg Stock Exchange in 1994. Since that time the company`s CAGR in earnings has exceeded 100%. The company employs 2000 personnel world-wide and has a market capitalisation exceeding US$1.3Bn. The company`s principal focus is to exploit the opportunities provided by the exploding Internet/Intranet marketplace and as a result has become a major Internet-orientated technology group, focusing on networking and related product and services. Datatec`s intention is to become a major international player in the computer networking and communications sector.
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