JSE-listed AdaptIT says shareholders have voted in favour of the acquisition of 51% of ITS Holding.
The company says the deal will give it a larger client portfolio and increase its public sector footprint. It adds that education-focused IT and software business ITS has a strong annuity revenue base - around 50% of its income - through licensing and support services, which makes it a good buy in the current financial times.
“There are also strong technology synergies between the two groups, predominantly in Oracle technologies, as well as in domain expertise relating to financial and enterprise resource planning systems,” explains AdaptIT in its financial announcement.
ITS operates from its head office in Pretoria and also has branches in Cape Town, Durban, Ireland and New Zealand. It brings a strong black empowerment portfolio to AdaptIT, which already has an established empowerment agenda, as a level three contributor.
The company recently said the deal is expected to boost earnings and headline earnings per share by 0.42%. This is an improvement from its previous expectation that the deal would benefit earnings by 0.32%, as it has secured funding for the deal.
Funding for the R16 million deal has been secured through Investec. AdaptIT, through its subsidiary InfoWave, will borrow R8 million for 48 months, at prime plus 1%. AdaptIT has secured a further loan facility of R5 million from ITS Tertiary Software, an ITS subsidiary, for 60 months at prime.
AdaptIT initially expected to fund the deal from its cash resources, as it had R14.4 million on hand at the end of February.
Related stories:
AdaptIT secures funding
AdaptIT buys ITS
ApaptIT sports a strong year
AdaptIT grows profit
Share
