Simeka seeks Ubuntu merger

Johannesburg, 16 Apr 2008

Simeka Business Solutions Group has issued a firm offer to acquire fellow AltX-listed SAB&T Ubuntu Holdings.

This deal will be settled through a share swap, valued at around R135 million, the companies said yesterday. SAB&T's current market capitalisation is around R116 million.

SAB&T is a professional and business services group. Its acquisition will add general business advisory and management consulting services to Simeka. It will also expose it to the public sector and SME markets in SA "and further abroad, to new markets in the UK", Simeka explained.

Simeka CEO Mohammed Varachia said: "The two groups have strong synergies in the resourcing, training and consultancy disciplines, and complementary operations in the ICT arena will be integrated easily into Simeka's existing offering. However, the acquisition will also enable Simeka to diversify into more broadly-focused general business support services."

This acquisition is in line with the long-term strategy to create a multi-dimensional group, offering a wide range of business support services, explained Varachia. Additionally, SAB&T's footprint in the UK will further Simeka's international expansion strategy.

"Simeka's client focus to date has been private enterprise and we have achieved limited penetration in the public sector and SME sectors. SAB&T's established relationships in this regard will provide a springboard to market our full range of services and provide a critical avenue for bottom line growth," commented Varachia.

It is proposed that SAB&T CEO Bashier Adam will join Simeka as deputy CEO "to support Varachia", while Jeff van Rooyen, SAB&T chairman, and non-executive director Fatima Jakoet, will join Simeka's board as non-executive directors.

Simeka warned shareholders of both companies that it may invoke the provisions of Section 440K of the Companies Act, No 61 of 1973. This means that if 90% of SAB&T's shareholders agree to the deal, its remaining shareholders could be forced to go along with the acquisition.

SAB&T closed 9.5% down, at 38c, on the news. Simeka lost 1%, to close at 89c yesterday.