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    TechCentralTechCentral
    Home » News » Datatec soars on looming corporate action

    Datatec soars on looming corporate action

    By Staff Reporter7 April 2017
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    Datatec’s share price was trading almost 10% higher on Friday afternoon after the company disclosed significant looming corporate action involving major subsidiary Westcon-Comstor.

    The Johannesburg- and London-listed technology company, which generates the vast bulk of its revenue outside South Africa, said in a note to shareholders that it is entertaining the “possible sale of a major share of Westcon-Comstor’s operations for a consideration (current and deferred) of more than US$800m” (R11bn at the time of writing).

    At 1.13pm on Friday, Datatec was trading 9% higher at R58,01/share after earlier in the session touching a 52-week high of R64,99. The share closed up 7,1% at R57.

    The surge in the share price came despite the company also issuing a profit warning. It said that headline earnings per share for the 12 months ended 28 February 2017 are expected to be more than 50% lower than the prior year.

    It blamed worse than expected results from Westcon-Comstor for the decline.

    “There was a decline in fourth quarter financial performance in the Europe, Middle East and Africa (Emea) region. Westcon-Comstor experienced disruption to the business as a result of final stages of SAP implementation in Emea. Westcon-Comstor has made adjustments to the operating model and Datatec expects this to support a rapid recovery.”

    It said trading at its Logicalis subsidiary was in line with management’s expectations.

    Datatec first told shareholders that it was in discussions that could affect its share price on 25 January. It renewed the cautionary announcement on 8 March.

    “The proposed transaction is subject to contract and exclusivity provisions,” the company said on Friday.

    “There can be no certainty that the transaction will be completed, nor as to the precise terms on which the transaction might be completed,” it added.

    “Shareholders are therefore advised to continue to exercise caution when dealing in the company’s securities. The company undertakes to announce further details of the potential transaction as soon as practicable.”  — © 2017 NewsCentral Media



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