Datatec acquires Comztek for US$10 million

ICT solutions group Datatec has announced the acquisition of leading hardware and software distributor Comztek Holdings, in a deal valued at R88 million (U$ 10 million).

Datatec will take a 100 percent stake in Comztek subject to regulatory approval by the South African authorities, with approval expected within three months of today’s announcement.

“This is an exciting opportunity to create a market leadership position across the continent which will extend and augment our existing emerging Africa and South African operations and bring a strong business with an excellent reputation into the Group,” said Lens Montanana, Chief Executive of Datatec.

“With revenues across Africa exceeding $300m the combined business will boast the scale and addressable market to attract new vendors wishing to create a regional presence.”

Datatec is clearly positioning itself to become one of the larger ICT groups on the African continent, with the deal making the merged entity the largest distributor on the South African market.

The company hopes that with the additional distribution elements gained through the Comztek purchase the group will steal the dominant market position across Africa.

The transaction – under which Comztek will be merged with Datatec unit Westcon – sees Datatec succeed at the second attempt to buy the pan-African distributor. Comztek shareholders rejected a previous Datatec offer two years ago. 

The ICT group is pushing forward with African expansion in line with an increasing trend among large corporations who are vying for prime position in Africa – which is expected to see a boom in growth over the coming period prompting companies to spread over the continent in the hope of reaping the benefits of the imminent economic growth spurt.

Montanana added: “Africa remains a key growth market for us and this deal significantly expands our footprint and offering into many new markets.  As the continent continues to develop our solutions and services will play an important part in the rapid adoption of more advanced IT and telecoms infrastructure.” 

Payment will take place through a range of avenues. R40 million (US$4.5 million) will be paid through loan funds, while a further R40 million (US$4.5 million) will be accounted for in the form of Datatec shares. The final R8 million (US$913,000) will be paid in cash, subject to Comztek achieving certain financial results in its report on December 30, 2012.

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