South African IT firm Datatec has reached an agreement to sell U.S. subsidiary Westcon-Comstor’s operations in North America and Latin America for $800 million, while 10 percent of Westcon-Comstor will be sold to Fortune 500 company SYNNEX for a further $30 million.
Operating in 70 countries across North America, Latin America, Europe, the Middle East, Africa and the Asia-Pacific region, Datatec is an international ICT solutions and services group based in Sandton, Johannesburg.
While the deal still awaits regulatory and shareholder approvals, maximum consideration of $830 million means that an equity valuation of the entire Westcon-Comstor division amounts to $1.1 billion, according to BusinessTech.
The Johannesburg Stock Exchange listed company saw its shares rise by 25 percent after the announcement.
SYNNEX will pay Datatec $500 million in SYNNEX shares and $130 million in cash, while the agreement also includes an additional $200 million cash earn-out subject to Westcon Americas’ performance in the 2018 financial year, according to Sharenet.
SYNNEX also has an option to acquire a further 10 percent interest in Westcon International for a fee of $30 million.
In a statement, Datatec mentioned the positive aspects of partnering with U.S. IT supply chain services company SYNNEX for the South African IT firm.
“The transaction provides a unique opportunity for Datatec to partner with a leading distribution business in North America and benefit from its significant scale,” Datatec said in the statement, reported Techcentral.
“The transaction also enables Westcon International to complete its transformation process and improve operating efficiency, so enhancing its value in the medium term,” the statement revealed.
As part of the deal, Datatec CEO Jens Montanana will be appointed to the board of SYNNEX in a non-executive capacity.
“Westcon-Comstor North America will benefit substantially from being part of a bigger business with a much larger addressable market – and so will our shareholders with our stake in SYNNEX,” Montanana said, according to Fin24.
“The transaction also realises value for our shareholders as a result of the strategic relationship with Synnex through its shareholding in Westcon International,” he added.
