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DATATEC LIMITED
(Incorporated in the Republic of South Africa)+
(Registration No. 1994/005004/06)
Announcement concerning :
- increase in Datatec's stake in Westcon Group, Inc. ("Westcon"); and
- continuing cautionary announcement.
1. Introduction
Rand Merchant Bank is authorised to announce that Datatec has increased its
stake in Westcon from 85.2% to 90.2% through the acquisition by Datatec of a
further 5.0% of Westcon from the original founders of Westcon and certain
other shareholders ("the Acquisition").
2. Rationale for the Acquisition
In order to facilitate certain changes in the management of Westcon as set
out below, Datatec has acquired an additional 5.0% of Westcon, which will
increase its stake in Westcon to 90.2%
Alan Marc Smith, currently the Chief Operating Officer of Westcon will
become the President and Chief Executive Officer of Westcon and has signed a
new four year service agreement with Westcon. Mr. Smith has been appointed
a director of Datatec with effect from 17 July 2001 and, together with other
shareholders, will continue to hold the remaining 9.8% of Westcon. Tom
Dolan, currently the Chief Executive Officer has been appointed as the
Chairman of Westcon and will continue to lead Westcon during its listing.
Although the timing of the listing of Westcon is uncertain due to weak
capital market conditions, Westcon is to proceed with the implementation of
its share incentive scheme to senior and middle management of Westcon in
anticipation of the listing.
3. Salient terms of the Acquisition
In terms of the Acquisition, Datatec has acquired an additional 5.0% of
Westcon from the original founders of Westcon and certain other shareholders
for an amount of United States Dollars ("USD") 22 million. The cash payment
is to be made from Datatec's internal cash resources.
4. Financial effects of the Acquisition
The table below sets out the financial effects of the Acquisition on the
headline earnings, excluding restructuring costs, and net tangible asset
value per Datatec share had the Acquisition been effective for the twelve
month period to 31 March 2001 :
Before the After the Increase/ Increase/
Acquisition Acquisition (Decrease) (Decrease)
(cents) (cents) (cents) (%)
Headline earnings per share 376 389 13 3.5
Net tangible asset value
per share 2 090 2 075 (16) (0.7)
Notes :
* The "Before the Acquisition" headline earnings per share, excluding
restructuring costs, is based on the audited results of Datatec for the
twelve months ended 31 March 2001, which includes the twelve month results
of Westcon for the period 1 March 2000 to 28 February 2001.
* The "After the Acquisition" headline earnings per share is based on
headline earnings per share, excluding restructuring costs, for the twelve
months ended 31 March 2001 adjusted for the additional earnings of R20
million attributable to the Westcon shares acquired and after deducting the
interest that would otherwise have been earned on the cash consideration in
USD at a current after tax interest rate of 2.5% per annum.
* The "After the Acquisition" net tangible asset value per share as at 31
March 2001 has been adjusted for the reduction in cash used to pay for the
Westcon shares.
No financial effects have been given on basic earnings per share as the
directors believe such effects are misleading and that the headline earnings
per share excluding restructuring costs, correctly reflect the financial
effects of the Acquisition.
5. Continuing cautionary announcement
Further to the cautionary announcement dated 5 July 2001 shareholders are
advised that negotiations are still in progress which, if successfully
concluded, may have an effect on the price of Datatec's ordinary shares.
Accordingly, shareholders are advised to continue to exercise caution when
dealing in their shares until a further announcement is made.
17 July 2001
Merchant bank and sponsor:
Rand Merchant Bank
Corporate Finance
A division of Firstrand Bank Limited
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