Dimension Data has finalised the sale of 25.01% of its South African subsidiary in a black economic empowerment (BEE) deal.
The deal to sell the stake to a BEE consortium headed by Andile Ngcaba, formerly director-general of the Department of Communications, was first announced in March, although the exact structure of the deal, as well as the price, were disclosed only this morning.
The BEE consortium consists of Ngcaba Holdings, Safika Holdings, and a group of broad-based BEE participants involving various empowerment groups from around the country.
After the acquisition Ngcaba Holdings will own 12.71% of Dimension Data SA (DDSA), with Safika holding 5%, the broad-based BEE participants 7.3% and DiData 74.99%.
However, the broad-based BEE participants` beneficial interest amounts to 10.2%, since Ngcaba Holdings has undertaken to allocate 2.9% of its 12.71% shareholding to the BEE participants.
Safika relinquished 1% to the broad-based group, while DDSA contributed 6.3%.
DiData says it appointed investment bank Cazenove to value DDSA, resulting in a valuation of R1.52 billion. This means the stake to be acquired by the consortium is worth R380 million.
The purchase price is to be partially funded by the consortium through a cash payment of R23 million, with the balance being settled through a notional vendor finance mechanism.
The mechanism allows it to pay the sum using 23.5% of annual headline earnings of DDSA over the term of the transaction, which will end after 30 September 2009, but not later than 30 September 2011.
"Successful empowerment transactions must involve black business groups who are able to actively participate in a business at all its levels and add value to the process of advancing and developing transformation," says DDSA CEO Allan Cawood.
"The BEE consortium, led by Andile Ngcaba, includes individuals with management experience, a working knowledge of the ICT industry and an understanding of the dynamics of the ICT services industry."
The consortium will be entitled to appoint three directors to the DDSA board, resulting in the consortium having 25% board representation.
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