BUSINESS TECHNOLOGY MEDIA COMPANY
Companies
Sectors
Financial

Dimension Data to buy Plessey in R1,6-billion deal


Johannesburg, 28 Jul 1998
Read time 3min 40sec

Establishes new telecoms company with Worldwide African Investment Holdings

Dimension Data Holdings has made an offer to acquire JSE-listed Plessey SA, one of the country`s top telecommunications companies.

The deal, worth an estimated R1,6-billion, will result in Dimension Data acquiring control of Plessey`s high growth BSW-Data and Solutions businesses.

Dimension Data Telecommunications and WorldWide African Investment Holdings, a R1,4-billion-plus black South African investment group which has a controlling interest in Plessey, will establish a Plessey joint venture. Worldwide will hold 51% and Dimension Data 49%.

The acquisition gives Worldwide and Dimension Data access to a large skills base in the areas of voice processing and communication technology management integration as data, voice and video technologies continue to converge.

Those parts of Plessey`s business which are not core to Didata`s operations - the company`s Asian interests, and manufacturing and defence business - are to be sold to a Plessey management consortium.

The new telecoms company will fulfil Plessey`s recently announced multi-million rand contracts with Telkom.

BSW Data (Pty) Ltd, a software management company involved in complementary activities to those of Dimension Data Solutions Group companies including SPL and Dimension Data Interactive (DDI) and Plessey`s solutions division will also be incorporated into complementary Dimension Data operations.

Malcolm Rutherford, financial director of Dimension Data says the deal is a solid financial move and will have a positive effect on Dimension Data`s earnings.

"As the complexity of technology has increased, the clearly defined boundaries between different technologies is blurring. This is illustrated by the abundance of multimedia traffic on previously voice- or data-dedicated networks. This has resulted in growing demand by businesses around the world towards suppliers able to offer a one-stop, integrated IT-telecoms solution.

"In order to provide this service, traditional IT and telecomm companies are joining forces to acquire additional and very different skills. A prime example of this is the recent merger of Bay Networks, a US-based IT giant and one of the `big-four` global telecommunications companies, Nortel.

"The Dimension Data-Plessey transaction positions the group strongly in the technology areas which have tremendous growth potential while simultaneously ensuring Didata has access to the a solid pool of IT and telecoms skills," he explains.

Worldwide managing director Phutuma Nhleko says the deal is a logical step for the company. "Although we only had 14% of Plessey`s share, we controlled the company through a voting pool with Sanlam. This move with Dimension Data will consolidate and entrench our interests in a dynamic, rapidly growing industry sector," he adds.

Following the completion of a due diligence, Plessey shareholders will receive 30 Dimension Data shares (valued at R35) for every 100 Plessey shares.

Note to Editors:

Dimension Data Holdings is SA`s largest value-add Information Technology (IT) integrator, operating in the telecommunications, customer management, software and network integration arenas.

Worldwide Africa Investments is a major black South African investment group with more than R1,4-billion interests in the oil, telecoms and financial services industries. This includes a 51% shareholding Zenex Oil, 100 % of Afric Oil, and 40% in Infinity.

Plessey Corporation is a South African listed company with a R1.47-billion turnover. The Group addresses the electronics and telecommunications markets in Southern Africa.

Plessey positioned itself to be a significant player in the niche Southern African and selected world markets it addresses through a combination of R&D, local manufacture, project management skills, focused marketing and Selected international agencies and alliances.

Plessey Corporation declared a 75% improvement in headline earnings to 47,2 cents (26,9 cents) per share for the year to March 1998. Attributable income was up 62% at R67,2 million (R41,4 million), translating to earnings (on a fully diluted basis) of 44,4 cents (28 cents) per share. The increase in earnings from Plessey, which shed its loss-making consumer products business in May 1997, came off a 52% increase in operating income to R94,8 million (R62,3 million). Group revenue rose 12% from R1,31 billion to R1,47 billion, and capital employed dropped from R654 million to R626 million. Return on capital rose from 9,4% to 15%.

Editorial contacts
Ballard & King Communications Hilary King (011) 883 5013
Dimension Data South Africa Malcolm Rutherford 709 1000
See also