| Tue 21 Aug 2001, 0:00 | | Cs Computer Services: Acquisition Of 100% Of Getro |
|
CS COMPUTER SERVICES HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/015131/06)
("CS Holdings")
Share code: CSH
ISIN code: ZAE000022034
ACQUISITION OF 100% OF GETRONICS SOUTH AFRICA
1. INTRODUCTION
Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited and Gensec
Bank Limited are authorised to announce that CS Holdings has entered into an
agreement with Getronics NV ("Getronics"), a company incorporated in the
Netherlands, to purchase 100% of the shares of, and shareholders' claims
against, Getronics South Africa (Proprietary) Limited ("Getronics SA"), with
effect from the first day of the month following the month in which all
suspensive conditions have been met ("effective date"). CS Holdings will
also enter into a Strategic Alliance agreement with Getronics which will
provide CS Holdings access to the world-wide infrastructure, experience and
knowledge of Getronics in the IT industry.
The acquisition is subject to the suspensive conditions set out in paragraph
5 below.
2. INFORMATION ON GETRONICS SA
2.1 Getronics is one of the world's leading providers of information and
communications technology (ICT) solutions and services to professional
users. Getronics SA became a wholly-owned subsidiary of Getronics with the
acquisition by Getronics of Wang Global Services during June 1999. Getronics
currently employs approximately 30 000 employees globally, with a direct
presence in over 35 countries and headquarters in Amsterdam, The
Netherlands. Getronics' regional head offices are situated in Boston,
Singapore and Washington DC.
2.2 Getronics provides high-value business solutions and vendor-independent
technology consulting, system integration and outsourcing services to its
clients in order to develop lasting partnerships in targeted industry
segments. Its service offerings are divided in three main business lines:
* Business Solutions and Consulting;
* Infrastructure Integration, which includes network and enterprise system
integration; and
* Managed Services, on-site support, helpdesk, network and asset management.
Combined, these service offerings encompass the full end-to-end e-Business
services spectrum from strategic planning to infrastructure management and
outsourcing.
2.3 Getronics SA offers the same main service lines locally. The main
revenue contributor is Managed Services (q 80%) and the balance is generated
by Infrastructure Integration (q11%) and Business Solutions (q 9%).
Approximately 75% of the company's revenue is annuity based in terms of long-
term outsourcing and support contracts.
2.4 Getronics SA is currently one of the leading high-value technology
integration, deployment and management services companies in South Africa.
The company has partnerships with leading platform and technology suppliers,
such as Microsoft, and is a major supplier of desktop and network services
and IT outsourcing to a number of blue chip clients, which it supports on a
national and international basis.
2.5 Getronics SA is represented in all the major regions in South Africa
through an infrastructure of 38 branches and currently employs more than 570
employees. The turnover of the company for the year ended 31 December 2000
was R157 million.
3. RATIONALE FOR THE ACQUISITION
3.1 Synergies with CS Holdings
Both CS Holdings and Getronics SA apply the same business model in that they
supply a high-value, end-to-end IT solution to their clients. Getronics will
be purchased as a subsidiary of CS IT Solutions (Proprietary) Limited ("CS
IT Solutions"), the infrastructure support and services division of CS
Holdings. With the acquisition of Getronics SA, CS IT Solutions will be one
of the three biggest suppliers of IT networking and infrastructure services
in South Africa.
3.2 Rationalisation and increased capacity
Overlapping services, geographical representation and infrastructure will be
merged with those of CS IT Solutions in order to unlock the obvious
rationalisation benefits, increase capacity utilisation and thereby increase
profitability.
3.3 Complementary service offerings and partnerships
Getronics SA's highly skilled consultants in the high-value local area and
wide area network (LAN and WAN) technology integration environment and its
partnerships with leading platform and technology suppliers, adds further
dimensions to the service delivery capability of CS Holdings. This will
allow CS Holdings to compete with the first tier IT companies in South
Africa. The acquisition of Getronics SA and Strategic Alliance agreement
with Getronics will greatly enhance CS Holdings' systems integration and
outsourcing offerings and complement its business consulting services.
3.4 Expanded services in business-critical disciplines
In addition, Getronics SA's added experience in increasingly critical
technology solutions disciplines, such as e-Business and Customer
Relationship Management (CRM), will enable CS Holdings to meet growing
customer requirements for these services.
3.5 Strategic shareholding and co-operation
As part of the transaction Getronics has the option of acquiring a strategic
shareholding in CS Holdings. Finally, as a condition of the acquisition
agreement, Getronics and CS Holdings will enter into a Strategic Alliance
and Master Service Provider agreement whereby international clients of
Getronics SA will continue to be supported and serviced by Getronics and
similarly CS Holdings will continue to support international clients of
Getronics in South Africa. This agreement will also provide CS Holdings with
access to the world-wide infrastructure, experience and knowledge of
Getronics in the IT outsourcing space as a strategic partner. The terms and
conditions of these agreements will be agreed on an arm's length market-
related basis.
4. FINANCIAL INFORMATION
4.1 Purchase consideration
The purchase consideration for the acquisition is R43 million and is subject
to an adjustment equal to the amount of any decrease or increase of the net
asset value of Getronics SA at the effective date in excess of or lower than
the net asset value of Getronics SA of R24,5 million at 30 June 2001.
The purchase consideration will be discharged by way of a vendor placement
at a price which will not be at a discount greater than 10% to the 30-day
weighted average traded price prior to the date that the placing is
authorised by the directors.
4.2 Financial effects
The financial effects of the acquisition on the headline earnings per share
and net tangible asset value per share of CS Holdings, had the acquisition
been effective for the six-month period ended 31 December 2000, are set out
below:
Before the After the Change
acquisition acquisition %
(cents) (cents)
Headline earnings per share 6,57 7,52 14,46
Net tangible assets per share 29,60 35,51 19,97
Number of shares in issue ('000) 141 344 186 630
The financial effects after the acquisition are based on:
- the acquisition being effective from 1 July 2000;
- a profit, after tax, contribution of Getronics SA for the six-month period
ended 31 December 2000 of R4,7 million;
- an unadjusted purchase consideration of R43 million; and
- the issue of 45 286 000 CS Holdings shares at 95 cents per CS Holdings
share in settlement of the purchase consideration.
5. SUSPENSIVE CONDITIONS
The acquisition is subject to the following suspensive conditions being
fulfilled:
* the approval for and subsequent listing of the new shares by the JSE
Securities Exchange South Africa ("JSE"), the approval by the Competition
Commission and any other regulatory authorities, insofar as may be
necessary;
* the finalisation and conclusion of the Strategic Alliance and Master
Service Provider agreements referred to in paragraph 3.5 above; and
* shareholder approval, if required.
6. CIRCULAR TO SHAREHOLDERS
A circular giving full details of the acquisition, which is subject to
approval by the JSE, will be sent to shareholders within 28 days of this
announcement.
Midrand
20 August 2001
Joint sponsors
Barnard Jacobs Mellet Corporate Finace
Gensec Bank Limited
(Registration number 1996/004744/06)
Corporate advisers
Havadel Finance (Proprietary) Limited
(Registration number 1994/009281/07)
Gensec Bank Limited
(Registration number 1996/004744/06)
