Datatec narrows search for partner to two suitors
Lesley Stones
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Information Technology Editor
TECHNOLOGY group Datatec is close to concluding empowerment discussions, with its directors negotiating with two suitors vying for a 25% stake in its local operations.
CEO Jens Montanana said yesterday an equity deal could be announced as early as next month.
“We are looking at two suitors,” he said, one an investment company and the other an active player in the technology industry.
Datatec earns only 3% of its revenue in Africa, but with global revenue of $2,3bn in the 2004 financial year the local operations represent a sizeable contribution.
Montanana said the value of the local business and likely price for a 25% stake had yet to be finalised.
Datatec will group local activities into a new division so it can sell a stake without involving activities in other countries.
“This will involve grouping our local assets to create a South African holding company and introducing black empowerment participation across those businesses. We won’t do it piecemeal,” Montanana said.
“We are going through an evaluation at the moment based on where we are on this year and next year’s budgets.”
Datatec’s two local operations are networking equipment distributor Westcon AME and wireless technologies specialist RangeGate.
Its figures have been disappointing for the past few years. A thorough overhaul involving office closures and widespread redundancies brought it back to profitability for the first half of the current financial year.
Montanana said the second half would see an improvement, as services divisions Logicalis and Analysys Mason were enjoying better second-half performances. Logicalis is a technology services division and Analysys Mason a UK-based telecoms consultancy.
“The only suppressant on group earnings is the appreciation of the rand,” he said.
Datatec’s largest division, Westcon, was still facing challenges, said its new CEO Tom Dolan. Last year its European branches contributed much to profit, but this year they were less impressive.
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