JSE-listed 4Sight Holdings has agreed to sell its subsidiary Digitata, which it bought in 2017, for R91.9-million, to its original owners.

The sale terms include what’s called an “anti-embarrassment clause”, which permits 4Sight to claim 50% of any profits if the Digitata asset or parts of it are sold for more than the deal’s sale price within 12 months of the transaction taking effect.

The transaction will be funded by the return of 290.5 million 4Sight shares by the purchasers to 4Sight. These shares will be cancelled, reducing the issued share capital of 4Sight from 791.3 million to 500.8 million shares.

The anti-embarrassment clause states that should any of the buyers dispose of any of the Digitata equity or any of its assets to a third party for a profit within 12 months of the sale, then the purchasers will become liable to 50% of any profit made.

4Sight CEO Tertius Zitzke said the sale of Digitata is part of the group’s strategy of offloading subsidiaries that are not profitable and that are not aligned with the group’s growth strategy.

“Digitata forms part of 4Sight’s telco cluster of companies, which posted a 45% decline in revenue in the 2019 financial year, with an after-tax loss of US$10.8-million,” he said.

Missed targets

4Sight said Digitata has not operated profitably for the past 18 months and has not achieved its agreed budget targets.

“Digitata was acquired on 1 July 2017, just before 4Sight was listed on the JSE’s AltX board, at a cost based on its anticipated financial performance. This performance has not materialised and, at the same time, Digitata’s business does not align with 4Sight’s new growth strategy.”