| Tue 11 Nov 2003, 14:58 | | Bonanza for Comparex shareholders |
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Once-off dividend of R6 a share flows from IT firm's successful empowerment deal
Information Technology Editor
COMPAREX shareholders can look forward to a one-off payment of up to R6 a share after the company concluded an empowerment deal that leaves it free to prise open its R2,2bn war chest.
Comparex has long been under fire for retaining so much cash, but held on to the money in case an empowerment deal called for some hefty subsidies. Now it has announced a market-value marriage with Business Connexion, leaving its cash surplus to requirements.
About R300m will be retained for working capital along with R300m in case it loses a long-running tax wrangle. The rest will be paid out to investors, and since Comparex owns just 30-million of the 263-million shares in issue, many investors will benefit.
CEO Peter Watt said he was "happy to see it all go" now the full extent of the financing the empowerment deal had been resolved. His firm was strongly cash-generative with no plans for any major acquisitions, so the money could be handed out quickly, he said.
The R225m deal for privately owned Business Connexion to take a 25,01% stake has been hailed as proof that willing players can strike deals that not only benefit both the black and white partners, but also reward their shareholders.
That has turned up the pressure on its rivals to finally sign credible empowerment deals.
"Nobody can really have an excuse now," said Dali Mpofu, chairman of a working group formed to draw up an empowerment charter for the information technology (IT) industry. "It's time to stop searching and start signing. People who don't transform must be punished by not winning business," he said.
Mpofu said he hoped the IT industry would react as the liquid fuel industry did when the first empowerment deal was signed, with other firms scrambling to follow suit. "Let's hope their rivals will follow when they see the competitive advantage it gives them."
Dimension Data, Spescom and AST are among the larger IT players yet to clinch empowerment deals, although they regularly cite such a move as imminent. Allan Cawood, the CEO of Dimension Data SA, said Comparex may have gained a first-mover advantage, but Didata was working on a deal that should make people "sit up and take notice". He could not specify exactly when a deal would be finalised, however.
Spescom has also entered into negotiations with a black partner .
The marriage between Business Connexion and Comparex is the kind of deal most white firms are dreaming of, since Business Connexion will fold its already successful operations into Comparex rather than entering as a passive investor.
That will instantly boost the skills of both companies, and the kudos of creating SA's largest black empowered IT player should quickly see it win more business. "This deal is going to do great things for our company," said Comparex's CEO.
Business Connexion has also paid market price for its stake, another reason why shareholders should be happy.
Comparex is lending Business Connexion R117m to help fund the buy-in, which will be paid back with interest.
Comparex supplies IT hardware and software, professional services, and runs IT infrastructure on an outsourced basis. Business Connexion is a specialist in business systems based on Microsoft software, a field where Comparex was anxious to boost its skills.
The merged entity will enjoy new cross-selling opportunities, and will boost the acceptability of Comparex when it bids for government contracts.
Nov 11 2003 07:27:24:000AM Lesley Stones Business Day 1st Edition
Tuesday
11 November 2003
