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Datatec - Acquisition of Avnet Inc"s HP enterprise end-user business
Subsequent to the announcement released on SENS today, 28 November 2005 at
15h00, shareholders are advised that the headline and the paragraph relating to
the "Rationale for the Acquisition" have been corrected, as appears in the
revised announcement below:
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 enterprise end-user business
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.
The Acquisition
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.
Rationale for the Acquisition
The acquisition is in line with Logicalis Group"s strategy to grow both
organically and through acquisition especially in the US and UK markets, 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 05:37:09 PM Produced by the JSE SENS Department
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