IT systems integrator CS Holdings (CSH) has acquired the desktop break-fix business of ICL Africa for R8 million.
The acquisition is expected to be worth R100 million over the next three years, says CS IT Solutions MD Johann Kunz. It is also expected to make the division more profitable, with a solid improvement in margins.
The group has acquired the stock and assets of ICL`s break-fix services business, and 50 ICL staff members are to be transferred to CS IT Solutions.
Kunz says the agreement between ICL and CS Holdings has three components: the acquisition of the services business, which will be integrated into CSH over a month; a backsourcing deal; and a five-year co-operation agreement.
ICL is refocusing its business globally and its parent company, Fujitsu, has decided to withdraw from the IT break-fix business. ICL SA put out a selective request for proposals for the services aspect of its business.
Kunz says once the two parties came together they decided the fit between CSH and ICL was so complete that ICL decided to enter into sole negotiations with CSH.
He adds that the deal is very significant for the group not only because it gives it access to ICL`s products, but also because of the resulting economy of scale and access to new customers in the retail, financial services and parastatal sectors.
He notes that the deal will make the company the number five infrastructure service provider in SA.
"This is not a one-off deal," he says. "We have always said we will never acquire profits. When we make acquisitions it is to grow our services offering and geographical spread, or to achieve economy of scale. This deal fits in with the latter requirement.
"It is part of a full strategic plan we are embarking on to allow CS IT Solutions to be the number three infrastructure service provider in SA."
CS IT Solutions will assume responsibility for all ICL infrastructure services on a national basis, with a central focus on desktop and peripheral support, as well as call centre and project services.
It will also assume support responsibilities for many thousands of support devices. Kunz says 95% of ICL`s support business is for third-party annuity-based service-level agreements.
He says the acquisition adds 30% to CS IT Solutions` overall size.
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