JSE-listed Pinnacle Technology Holdings has offered to buy distribution business Axiz Technology for R170m in a deal that could see it become the largest IT distributor in the country.
In a statement to shareholders on Tuesday morning, Pinnacle revealed its decision to make the offer to Axiz, which is expected to merge with Pinnacle’s Workgroup business.
Axis is a distributor for Hewlett-Packard, LG Electronics, Acer, Samsung, Seagate, Asus and other big-name brands. It also has its own line of hardware, including PCs and components.
“Both the Workgroup and Axiz brands are well respected in the market and the two companies have a very close cultural fit,” says Workgroup MD Doug Woolley.
He says the merger is expected to provide Workgroup with increased products, customers and reach, including a larger African presence.
Axiz brings with it several operations in Botswana, Namibia and Zambia.
Pinnacle and its principal competitor, MB Technologies, have been battling it out for the top spot in IT distribution in the region and analysts say the Axiz deal could give Pinnacle the edge over its unlisted rival.
Research analyst for technology systems at International Data Corp, Hannes Fourie, says the deal could give Pinnacle enough reach to become the largest distribution business in SA.
Deals of this magnitude had been expected for some time given dwindling margins in the hardware space.
“Everything comes back to margins,” says Fourie. “Distributors have to push large numbers of units to be successful.”
BMI-TechKnowledge head of IT research Clinton Jacobs says consolidation in distribution will keep coming.
The deal is subject to Competition Commission approval. However, analysts say it is unlikely to be contested. — Candice Jones, TechCentral