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Datatec Limited - Acquisition of Avnet Inc"s HP reseller business
Datatec Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC
("Datatec")
Acquisition of Avnet Inc"s HP reseller business
1. Introduction
The Datatec Board of Directors is pleased to announce that Logicalis Inc, a
wholly-owned subsidiary of Logicalis Group Limited, which in turn is a
wholly-owned subsidiary of Datatec International Limited, has reached an
agreement to acquire Avnet Inc"s HP enterprise end-user business ("the
Avnet HP Business") ("the Acquisition") comprising the business" customers,
intellectual property and employees.
Following the Acquisition, Logicalis Group"s businesses in the United
States will have combined annualised revenues of over 450 million United
States Dollars ("US$").
Datatec has received South African Reserve Bank approval for the
Acquisition. The effective date of the Acquisition is expected to be 9
January 2006.
2. The Acquisition
2.1 The Avnet HP Business
The Avnet HP Business is an HP Premier Partner, which derives the majority
of its revenue from two geographic markets - Southwest and Central USA. The
business, which has a base of some 700 end-user customers, is focused on
HP"s Intel and Alpha server, and storage solutions. The Avnet employees
dedicated to the Avnet HP Business will become employees of Logicalis Inc
following the completion of the acquisition. Logicalis Inc will not take on
employees involved in finance and administration of the Avnet HP Business,
as these functions will be performed by Logicalis Inc"s employees.
The Avnet HP Business is not a separate legal entity; it is a division of
Avnet Inc. The opportunity to acquire the Avnet HP Business arose out of
Avnet Inc"s strategic decision to focus on its distribution business going
forward.
Logicalis Inc will not be acquiring any working capital assets or
liabilities as part of the Acquisition.
2.2 Rationale for the Acquisition
The acquisition is in line with Logicalis Group"s global strategy to grow
both organically and through acquisition and will strengthen its strategic
partnership with HP. The Avnet HP Business is highly complementary to
Logicalis Inc"s business. Following the acquisition, Logicalis Inc"s
annualised revenues will increase from some US$350 million to over US$450
million. This increased scale will position Logicalis as one of the
largest independent system integrators in the US.
Logicalis has a limited presence in the Avnet HP Business" key geographic
markets. A strong footprint in Southern California is seen as strategic to
grow Logicalis Inc"s West Coast business. This applies particularly to
California, the sixth largest economy in the world, where a number of
investment opportunities have been evaluated but rejected over the past 18
months. The Business will provide Logicalis with a strong footprint in
California.
3. Conditions Precedent
The Acquisition is subject to conditions precedent as is normal for a
transaction of this nature.
Johannesburg
28 November 2005
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 28/11/2005 03:00:03 PM Produced by the JSE SENS Department
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