Reunert would consider buying EOH: ‘We’d be foolish not to’

JSE-listed technology, electronics and electrical group Reunert would consider an acquisition of EOH Holdings if the listed IT services group was put up for sale.

That’s the word from Reunert CEO Alan Dickson, who was speaking to TechCentral on Wednesday following publication of the group’s interim financial results for the period ended 31 March 2022.

Dickson said Reunert has big plans to grow its presence in the ICT market and has earmarked R1-billion in cash and debt instruments for acquisitions.

“We’d be foolish not to” look at EOH if the IT group, which is led by CEO Stephen van Coller, was put up for sale.

Bloomberg News reported earlier this month that the outright sale of EOH is one of the options being considered by Van Coller and his team. Other options include a rights issue (the issuing of shares for cash) and the sale of more assets to resolve the group’s legacy debt issues.

“We are exploring all opportunities to maximise value for shareholders,” Van Coller was quoted as saying. “Now that we are turning a profit, this has opened up many opportunities for shareholders.”

Dickson said buying EOH, if the opportunity arose, is “something we would consider”. It would also consider buying EOH assets, rather than the whole company, provided those assets have a strategic fit with Reunert. EOH’s cloud and cybersecurity businesses are of particularly interest, he said.

EOH had a market cap of R953-million at the time of publication. Dickson emphasised that there are no active discussions taking place between Reunert and EOH.

Big strides

Reunert has already made big strides in the past year in building a stronger presence in the IT services market. Last June, it launched +OneX, a system integration business spearheaded, ironically, by a former top EOH executive, Rob Godlonton.

Godlonton left EOH in 2019, soon after revelations of widespread corruption at the group began making headlines. He had been responsible for building EOH’s IT capabilities and later creating and leading iOCO, its IT services business. He was not implicated in the corruption that took place at EOH.

“We are not looking to copy EOH [with +OneX], which has a big managed services base. We are looking to position ourselves at the higher end of that space,” Dickson said.

However, the Reunert CEO said he expects +OneX, which has made a series of strategic and “bolt-on” acquisitions in the past year will have at least R1-billion in revenue and R100-million in operating profit “in a relatively short period of time”.

“Capital allocation to the ICT segment is a core strategic imperative for Reunert. We need to improve the offering we have, and we have set aside capital (the R1-billion) for that purpose.”

Reunert had cash (and cash equivalents) to hand at the end of March of R590-million, while its balance sheet is “largely unleveraged at this stage”. This, Dickson said, puts the group in a strong position to seek out acquisition opportunities. He emphasised, however, that Reunert will be careful to ensure that it doesn’t overpay.  – © 2022 NewsCentral Media

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