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Didata revises Plessey bid

Gains 75% shareholder support

Johannesburg, 14 Aug 1998

Dimension Data has completed its due diligence on Plessey Corporation Limited ("Plessey"). The due diligence has confirmed the strategic benefits for Dimension Data of the acquisition of the entire issued share capital of Plessey and the formation of a telecommunications joint venture with Worldwide African Investment Holdings.

Dimension Data has received strong institutional support for the strategic rationale behind the Group`s bid for Plessey. There was, however, feedback that the initial offer of 30 Dimension Data shares per 100 Plessey shares did not adequately reflect the inherent medium to long term value of the Plessey group.

Subsequent to the satisfactory completion of the due diligence and in conjunction with discussions with key institutional Plessey shareholders and Plessey management, Dimension Data has increased the proposed exchange ratio.

The revised ratio is 35 Dimension Data shares for every 100 Plessey shares held which, based on Dimension Data`s closing price of 3525c, equates to an offer price of 1234c per Plessey share.

A further rationale for increasing the exchange offer was to avoid a prolonged, drawn out battle for the company and prevent one of Plessey`s competitors from gaining access to confidential strategic group information.

The Plessey board has given an undertaking to recommend the revised offer.

In addition, subsequent to the revised offer, 75, 7% of Plessey shareholders have irrevocably undertaken to accept the offer or to vote in favour of any resolutions that might be required to effect the proposed acquisition.

Dimension Data anticipates being in a position to make a further announcement within the next week.

Attractions of the deal for Dimension Data:

  • The deal gives Dimension Data control of Plessey`s high growth BSW-Data and Solutions businesses which compliment Dimension Data`s existing operations.
  • The acquisition of Plessey gives Dimension Data access to a large skills base in the areas of voice processing and communication technology management integration to accommodate the convergence of data, voice and video technologies.
  • The Plessey telecommunications company, which will operate as a joint venture between Dimension Data and black owned Worldwide Africa Investments, will be well positioned to compete successfully in the high growth telecoms market.
  • The proposed sale, to a Plessey management consortium, of the businesses not regarded as core to Dimension Data`s operations (Asian interests, manufacturing and defence business) will allow the Group to retain its focused strategy of participating in high growth information technology and related areas.

Editors Note

On July 27, 1998 Dimension Data Holdings announced that it had made an offer to acquire JSE-listed Plessey SA, one of the country`s top telecommunications companies for an estimated R1,6-billion.

The Dimension Data deal, as announced, would:

  • Give Plessey shareholders 30 Didata shares for every 100 Plessey shares held.
  • Give Dimension Data control of Plessey`s high growth BSW-Data and Solutions businesses.
  • Enable the establishment of a Plessey joint venture telecommunications company incorporating Dimension Data Telecommunications and Plessey`s telecommunications business. WorldWide African Investment Holdings, a
  • R1,4-billion-plus black South African investment group and a major Plessey
  • shareholder, was to hold 51% of the new joint venture, and Dimension Data 49%.
  • Give WorldWide and Dimension Data access to a large skills base in the areas of voice processing and communication technology management integration to accommodate the convergence of data, voice and video technologies.
  • Involve the sale - possibly to a management-led consortium - of those parts of Plessey`s business which are not core to Didata`s operations: the company`s Asian interests, and manufacturing and defence business.

Two weeks later, on August 12, Spescom announced details of its counter-offer for Plessey.

The key points of this offer were:

  • The value of the deal was estimated at R1,9-billion at the time the offer was made.
  • Plessey shareholders could take 70 Spescom shares for every 100 Plessey shares, or 53 Spescom shares plus R300 cash for every 100 Plessey shares.
  • The two companies would be merged.
  • A number of the underlying companies could be listed separately.

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Editorial contacts

Hilary King
Ballard & King Communications
(011) 883 5013
hilking@icon.co.za
Malcolm Rutherford
(011) 709 1000
Jeremy Ord
Dimension Data South Africa
(011) 709 1009