Datatec soars on $830m asset sale - TechCentral

Datatec soars on $830m asset sale

Jens Montanana

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

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