Datatec expands African footprint

Johannesburg, 13 Jun 2007

Datatec Group subsidiary, Westcon Africa Middle East, has acquired a 51% stake in the combined businesses of JET Distribution and the Sparnoon-Dynatech Group.

The company says the move will grow Westcon`s South African and African revenue from a current R 500 million to over R1.2 billion.

Westcon paid $7.2 million (about R52 million) in cash for its share and can acquire the remaining 49% over the next five years in terms of the deal.

Datatec Group CEO Jens Montanana says the acquisition boosts the group`s presence in emerging markets and "increase[s] our scale and enhance[s] our product mix. Both are key priorities for Datatec".

Westcon SA CEO Jacques Malherbe says the acquisition will see the company expand its footprint beyond SA into Nigeria, Ghana, Tanzania, Uganda, Namibia, Botswana and Kenya, with warehousing and distribution facilities in Dubai and the UK.

"This acquisition will reaffirm our position as the largest distributor of Cisco products in Sub-Saharan Africa, giving us an estimated 65% share of the distribution market," says Malherbe. "It will also complement the product range we currently market in Africa to now include HP, Dell, Symantec, Novell, Epson and TallyGenicom equipment. At the same time, it will give us the opportunity to take more of our South African partners into the African market."

Malherbe adds the acquisition will consolidate the company`s leading position in the networking, security and convergence markets across Africa.

Better availability

It "will also position us as the only global ICT distributor operating on the African continent with warehousing and logistics support in Africa, Europe and Dubai. This gives us the added advantage of having a broader and more immediate availability of stock than that offered by our competitors. We will also boast 68 permanent staff on the ground in Africa, outside of SA.

"We now have direct access to approximately $205 million (about R4.8 billion) worth of stock and can deliver products to the reseller community or their clients faster than it takes the vendor to manufacture and deliver. This enables us to achieve turnaround of product that is unmatched in Africa," says Malherbe.

He adds that the merger will enhance Westcon`s ability to roll out programmes such as OneVoice, OneDefence and ConvergencePoint across the rest of the continent, creating access to key products and solutions.

Growth opportunity

Commenting on the partnership with Westcon, Paul Moser, CEO of Sparnoon-Dynatech UK, says: "This opens up a new era of growth and opportunity for us. In addition to technical resources, we are now able to increase both our coverage and product sets."

John Tierney, MD of JET Distribution, points out that the two companies have presence on the ground. "With the backing of Westcon, we now have the opportunity to grow our presence."

Malherbe notes that Africa is a burgeoning market where ICT infrastructure is concerned. "A small installed base means there is significant growth rate potential on the continent," he says. "This is supported by a recent African Development Bank report, which expects economic growth on the continent to reach nearly 6% in 2007, the highest in 20 years."

These latest acquisitions mean the company is in an ideal position to serve this growing market, he adds.