After an 11-year partnership, Hitachi Data Systems (HDS) has completed it acquisition of data centre company Shoden Data Systems.

Shoden’s management team will remain unchanged and it will retain autonomy in terms of strategy and decision making. HDS hopes the deal will give it a foothold in Africa, where Shoden already enjoys a substantial presence.

HDS regional manager Tony Reid says the decade-long partnership between the companies made the acquisition, the value of which has not been disclosed, an obvious next step and that Shoden has long been Hitachi’s only route into SA and sub-Saharan Africa.

He says both companies operate in similar ways and have similar corporate cultures. Furthermore, much of Shoden’s business is “closely related to HDS products and solutions, which means integrating the two could hardly be more straightforward”.

Shoden has grown significantly and expanded into Africa in the last decade and Reid says HDS sees Africa as an expanding market. “We want to make sure we get our share of that market.”

He says Shoden will remain ostensibly independent.

“We like the country manager to be the CEO of the company and to make decisions for the marketplace in which they operate,” he says. “Shoden’s management will remain an integral part of the business and Marc [Trevenen] remains as MD.”

HDS originally announced its interest in Shoden in October of last year. The deal was subject to approval by various authorities and competition boards in all of the countries in which HDS and Shoden operate.

Rather than chasing new customers Shoden’s expansion into Africa has been facilitated by following its existing customers into new territories, particularly telecommunications and banking clients with which the company enjoys existing relationships in SA.

Shoden now has a presence in Nigeria, Ghana, Uganda and Tanzania and uses its SA office to support operations in Namibia, Botswana, Malawi, Swaziland, Zambia, Mozambique and Lesotho.

Faritec disaster
In 2009, Shoden made headlines for the wrong reasons when it acquired JSE-listed Faritec, which later folded.

Marc Trevenen, Shoden’s MD, says that like others who bought Faritec shares, Shoden is laden with now-worthless stock. He says the company had hoped to salvage Faritec but that the “hole was deeper than we anticipated”.

“After an in-depth analysis, we decided we couldn’t risk Shoden going down with [Faritec],” says Trevenen. “We took a board decision not to invest more in it. There were some international groups interested in Faritec, but it was just too far gone.”

Trevenen says Faritec may have been saved had Shoden gotten involved earlier. Shoden had significant cash reserves at the time, sufficient to keep the company operating for two years. “We were foolish in our approach because we were cash flush,” says Trevenen. “Shoden lost a lot of money on Faritec, and we can’t run away from that.” — Craig Wilson, TechCentral