In a bid to strengthen its own distribution business, London- and Johannesburg-listed IT group Datatec is making a play for local distribution business Comztek.
Datatec says it has made a R97m offer to Comztek’s shareholders for 100% of the business. According to Datatec’s statement, part of the offer will be paid in cash and the rest in new Datatec shares.
Datatec is hoping to integrate Comztek into its Westcon business. It increased its ownership of the local Westcon business from 55% to 74,9% in April last year after it sold its stake in empowerment business African Legend Indigo.
The IT group has been expanding its Westcon business aggressively across emerging markets. In Africa it now has offices in Cameroon, Ghana, Kenya, Nigeria, Tanzania and Uganda.
Datatec’s operations in emerging markets brought in about 7% of the group’s revenue in its last results.
Comztek has also started growing outside SA and has operations in Kenya, Namibia and Zambia.
“Comztek’s operations in the rest of Africa, combined with Westcon’s pan-African footprint, could lead to the creation of a strategically significant player across many African markets,” says Datatec.
The group has declined to comment further on the deal, saying only that discussions with Comztek shareholders are still in progress. It has not yet completed the due diligence on Comztek.
However, it appears Comztek’s primary shareholder, Mustek, is not happy about the proposed deal. Datatec says it has received support for the deal from management and shareholders, except Mustek.
Mustek owns 41,8% of Comztek.
Mustek CEO David Kan says the company can’t comment on the proposed deal as it is subject to conditions. He says until the deal is unconditional he can’t say anything about it. “They haven’t done due diligence on the business yet, so there may be other conditions. We just don’t know yet,” he says. — Candice Jones, TechCentral