Datatec is planning to expand its European presence with the purchase of the networking distribution activities of Dutch company Landis Group.
No price has been disclosed, but Datatec says it will pay for the purchase through a combination of cash and Datatec or Westcon shares.
Datatec says the terms of the deal are yet to be finalised, but it has signed a formal letter of intent.
Landis is listed on the Amsterdam Stock Exchange, and its networking distribution activities comprise operations in 10 European countries (Austria, Belgium, Denmark, France, Germany, Netherlands, Norway, Spain, Sweden and the UK).
"We have been working on this for some time and there is compelling logic for both Landis and ourselves to enter into this transaction," says Datatec CEO Jens Montanana.
Datatec says Landis`s distribution business is one of the largest in continental Europe, with annual revenues exceeding 450 million euros and about 600 staff members.
The group plans to combine the distribution assets and businesses of Landis with US subsidiary Westcon, to form the industry`s largest data and voice networking distributor concern.
The enlarged Westcon Group is expected to become the largest player in Europe in its sector.
"The distribution assets of Landis overlay almost perfectly with the footprint of Westcon`s operations," says Montanana.
"In one single transaction Westcon will go from being a large but regional player in Europe to a market leader, with a presence in 10 countries and with revenues far exceeding the next closest competitor.
"The chances of Westcon being able to consolidate its market leading position and reach revenues around $3 billion in the near future are beginning to appear a real possibility. No pure play competitor of ours has the geographical footprint to match us nor the leverage with the industry`s leading vendors, especially when it comes to technologies in the convergence space."
The Datatec share, which lost 50c to close at R21 yesterday, was trading 6.2% or R1.30 up at R22.30 on the JSE this morning.
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