Datatec shares jumped by the most on record after the South African IT services company agreed to sell the North and Latin American operations of its Westcon-Comstor business for as much as US$800m.
Synnex of the U.S. will take over the operations and buy a 10% stake in the rest of the Westcon-Comstor division for $30m, Johannesburg-based Datatec said in a statement on Tuesday.
The deal will be settled with $630m up front, of which Synnex can pay as much as $500m in shares, with an additional $200m based on performance.
Datatec shares soared as much as 27% in Johannesburg, the most since at least 1995, and traded 17% higher at R60,01 as of 12.43pm local time. That values the business at R12,7bn. The stock is up 15% in London.
The deal erased a slump in Datatec shares that followed an 11 May warning that full-year earnings fell more than 50% due to a worse-than-expected performance at Westcon-Comstor, particularly in the three months to February. Sales at the division declined 7% over the year, with profit also down. On 22 May, Datatec said it wouldn’t pay a final dividend.
“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,” Datatec CEO Jens Montanana said in the statement. — (c) 2017 Bloomberg LP