Reunert, the holding company of Nashua, ECN, PanSolutions and other brands, intends using a large portion of the billions of rand on its balance sheet — including the proceeds of the sale of Nashua Mobile — to fund a range of acquisitions of information and communications technology (ICT) companies.
The company intends spending on average between R200m and R300m per acquisition to plug gaps it has identified in its portfolio, although if the right target were to come along, it could spend significantly more than that on a single transaction, Reunert executive director and Nashua CEO Mark Taylor said in an exclusive interview with TechCentral on Wednesday.
Gaps that Reunert has identified in its ICT portfolio include managed services, data centres, security, storage and Internet service provision, Taylor said. In some areas, it may look to partner with other service providers rather than pursuing acquisitions to expand its portfolio.
Taylor said there are significant margin pressures on Nashua’s traditional office automation business, which have been evident for a number of years already. Expanding the portfolio into related areas — and providing a complete office solution to the business market — makes sense in this context, he said. The idea is to offer customers anything related to office management, from managed print and document services to software to telephony, and to provide them with a single vendor and billing relationship.
At the end of September 2015 — the most recently available financial results — Reunert had R2,7bn in cash on its balance sheet and negligible debt, putting it in the enviable position of being able to expand through acquisitions. Its most direct rival, Altron, is not as fortunate — it is saddled with a large amount of debt that it is now seeking to reduce through the sale of assets such as cellular service provider Altech Autopage and cables business Aberdare Group as part of a broader restructuring.
Taylor groups the areas where Reunert wants to make acquisitions into three broad categories. These are managed services, which includes applications, cloud services, network services, desktop support, hosting, co-location and device management; technology, including server platforms, data centres, security and storage; and communications and Internet service provision, including data services, cloud, hosting, Internet access and potentially cellular.
“We are actively looking to make acquisitions, preferably medium to large, but we are not looking for a giant acquisition of the size of say a Business Connexion or a Gijima,” he said.
The challenge, he said, is finding suitable acquisitions at the right price. Acquisitions won’t necessarily be integrated into Nashua or the other Reunert ICT businesses either, he said. If it were to acquire an Internet service provider, for example, the company would continue to operate independently, with its own brand, but would provide services that could be sold or repackaged by other Reunert businesses. “We’d look to consolidate billing and, for example, create a Nashua ISP offering,” he said.
He said Reunert is not at an advanced stage of discussions with anyone at the moment, but has already had talks with a number of companies. “The parties have either walked away, or they have gone the private equity route — there’s a lot of private equity in this space at the moment, and a lot of it is being driven by black economic empowerment.”
In data centres, Taylor said Reunert won’t necessarily buy into this space or build its own facilities, but rather partner with established players such as Telkom and Teraco to resell their offerings through its various channels.
He said Reunert has no interest in playing in the consumer space after disposing of cellular service provider Nashua Mobile, though the group remains interested in potential opportunities in the cellular space. — © 2016 NewsCentral Media