| Thu 31 May 2001, 0:00 | | Cs Holdings Acquires Icl Africa Services Business |
|
BY R100M-PLUS OVER THREE YEARS
PRESS RELEASE
JSE-listed IT systems integrator CS Holdings has acquired the infrastructure
services business of ICL Africa in a deal expected to be worth well over R
100 million over the next three years.
CS Holdings has paid R8 million in cash for the assets and stock of ICL's
services business, which will see some 50 former ICL employees incorporated
into its ranks. The deal has been struck with CS Holdings' IT Solutions
division, propelling it into the top five IT infrastructure outsourcing
companies in the IT sector.
ICL is refocusing its business globally and its parent company, Fujitsu, the
second largest computer company in the world, has taken a strategic business
decision to withdraw from the IT break-fix business. Accordingly, ICL SA
put out a selective request for proposal for the services aspect of its
business.
According to Johann Kunz, MD of CS IT Solutions and an executive director of
CS Holdings, once the parties had time to evaluate each other. It was
decided that the fit between CS Holdings and ICL was so complete and
beneficial that ICL decided to enter into sole negotiations with CS
Holdings. "The synergies yielded have been so great since, validating this
decision," says Kunz.
Elvin de Kock, managing director of ICL Africa, says: "My team and I are
excited about the opportunities that this agreement offers ICL and our
customers. It creates a long-term partnership between two well established
entities in the IT sector and certainly bodes well for ICL's future. Our
combined strengths not only enhance both companies' IT infrastructure
service offering to current and future customers, but also sets the stage
for further development and growth."
The agreement sees CS IT Solutions assuming 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, an area
where CS IT Solutions has become a national leader. In addition, CS IT
Solutions will assume support responsibilities for many thousands of third-
party devices. "Indeed, 95% of ICL's support business is for third-party
annuity based service-level agreements," adds Kunz.
The acquisition adds 30% to CS IT Solutions' overall size, making it the
country's fastest growing outsourcer, with over 300 people servicing more
than 120 customers nationally. The acquisition is extremely beneficial for
both parties. "For CS Holdings, the most obvious benefit is economy of
scale, "says Kunz. "While we grow significantly with the acquisition, our
costs do not grow proportionally. It gives us access to a variety of new
customers, many of them blue-chip corporates."
The financial effect of the acquisition on the earnings per share of CS
Holdings, had the acquisitions been effective for the six months ended 31
December 2000 is set out below (latest published financial results):
Before the After the Change
Acquisitions Acquisitions %
(cents) (cents)
Earnings per share 6.57 7.58 15.37%
The effect on the net asset value per share of the company is not material.
Contact:
Johann Kunz, MD, CS IT Solutions, (011) 205 7000, jkunz@cs.co.za
Marthe Bijman, CS Holdings, (011) 205 7000 mbijman@cs.co.za
Dawne Canning, FHC, (011) 608 1228, dawne2fhc.co.za
