Logicalis' local operations acquired by IBM
- 30 March, 2004 12:46
Datatec, the Johannesburg Stock Exchange (JSE)-listed networking, technology and services group, has announced that its Logicalis subsidiary has sold its Australian and New Zealand operations to IBM for $US66m in cash, inclusive of working capital adjustments.
The sale of Logicalis A/NZ came after an unsolicited offer from IBM.
Logicalis A/NZ is a provider of ICT integration solutions including the design, deployment and management of ICT infrastructure. It employs more than 300 staff in Australia and New Zealand, and has partnerships with technology leaders such as Cisco Systems and IBM.
At Datatec's interim reporting date of August 31, 2003, Logicalis A/NZ represented 26 per cent of Logicalis' consolidated revenue and 25 per cent of its net assets.
Chief executive of Datatec and Logicalis, Jens Montanana, said that, until the IBM offer, there had been no intention to sell Logicalis A/NZ.
"These operations were central to our integration and services strategy internationally," he said. "However, the nature and value of this unsolicited offer was very compelling, particularly given that the suitor was IBM and the payment is entirely in the form of cash. The Datatec board is of the opinion that the disposal will enhance shareholder value.
"The total consideration represents a significant premium to the historical investment cost."
The transaction comprises a cash consideration of $46 million for the shares and a repayment of intercompany loans and payables amounting to $20 million. The effective date of the transaction is 1 March 2004. There are no conditions precedent in the sale agreement between Logicalis and IBM. The proceeds will be used to strengthen the balance sheet of the group and for potential acquisitions.
The Logicalis A/NZ operations were originally formed through the acquisition and merger of Anite's operations in Australia and New Zealand, CNI and later CSI.
The transaction value representws a significant return on the total cost of developing the region through a series of acquisitions which started in 1997, the company said.
All the Logicalis A/NZ employees and management will be transferred to IBM Australia and IBM New Zealand.
"The transaction represents a significant realisation for Logicalis Group after a number of years of cost-cutting and restructuring internationally," Montanana said.
"The deliberations that we went through in considering this transaction necessitated a strategic review of where and how the group should be positioned. To that end we have decided to focus our management and financial resources on the US and UK markets. We believe that by investing further in these areas we will be able to create a sharper focus, and, over time, extract superior returns in these two geographies, where we have considerable experience and scope for growth."
General manager of IBM Global Services Australia, Brendon Riley, said that the acquisition enhanced IBM's ability to deliver business value to clients of all sizes.
"Over the past 20 years Logicalis has built a world-class reputation as a leader in network services," he said. "The acquisition of Logicalis enhances IBM's capabilities in network consulting and integration - an area that our clients have identified as fertile ground for business transformation projects."