Datatec said on Tuesday that it has reached an agreement to sell subsidiary Westcon-Comstor’s operations in North America and Latin America for up to US$800m and 10% of Westcon-Comstor for $30m to US-listed IT supply chain services company Synnex.
Valued at up to R10,5bn at the exchange rate of R12,70/US$ at the time of writing, the deal equates to an equity valuation of the total Westcon-Comstor division of $1,1bn, the JSE-listed Datatec said in a statement to shareholders before markets opened for trading.
On closing, Synnex will pay Datatec $500m in Synnex shares and $130m in cash. It has also agreed to pay an additional $200m cash earn-out subject to Westcon Americas’ performance in the 2018 financial year. Synnex has an option to acquire a further 10% interest in Westcon International for $30m.
After the deal, Datatec will hold roughly 10,3% of Synnex’s total capital based on the company’s 200-day volume-weighted average share price of $109,67.
Synnex has a market capitalisation of $4,4bn and in its last financial year reported revenue of $14,1bn and earnings before interest, tax, depreciation and amortisation of $516m.
Datatec CEO Jens Montanana will be appointed to the Synnex board in a nonexecutive capacity.
“The transaction provides a unique opportunity for Datatec to partner with a leading distribution business in North America and benefit from its significant scale,” Datatec said in the statement.
“The transaction also enables Westcon International to complete its transformation process and improve operating efficiency, so enhancing its value in the medium term.”
Montanana described the deal as “an industry-transforming opportunity to partner with a strongly growing, well-respected Fortune 500 corporation”.
The deal must still get regulatory and shareholder approvals.
“Westcon-Comstor North America will benefit substantially from being part of a bigger business with a much larger addressable market — and so will our shareholders with our stake in Synnex.
“The transaction also realises value for our shareholders as a result of the strategic relationship with Synnex through its shareholding in Westcon International — a business which is yet to benefit from the ERP and [business process outsourcing]transformation programmes currently being implemented.” — © 2017 NewsCentral Media