Proposed acquisition of Crane Telecommunications Group for £20.7 million..
Date: 11 Apr 2007
Datatec Ltd ("Datatec", "the Group", JSE and LSE: DTC) has conditionally agreed to acquire Crane Telecommunications Group Ltd ("Crane", the "Acquisition"), a leading UK-based European value added distributor of voice, data and converged communications solutions, from various shareholders, including Apax PP Nominees Limited, for a maximum consideration of £20.7 million.
The consideration payable on completion will comprise the issue of new ordinary Datatec shares to the value of £9.2 million and £11.5 million in cash. The vendors have agreed not to dispose of any new ordinary shares received as consideration for a period of 90 days from completion. The cash consideration will be funded from either the Group's existing cash resources or alternatively, at Datatec's discretion, from an institutional placing of new ordinary Datatec shares. The Acquisition is expected to complete within the next 30 days.
Crane will be integrated into the European arm of Westcon Group, Datatec's distribution division. The purchase of Crane follows Datatec's recent acquisition of NOXS, a leading European security distributor, announced on 27 February 2007. These acquisitions are important steps in Datatec's strategic plans to leverage Westcon's financial strength and scale of operations in Europe, including both broadening and strengthening its vendor relationships. These two businesses also bring new opportunities in convergence, security and mobility to both new and existing customers.
Crane has offices in the UK and the Netherlands, and sells software, telephony and data solutions to companies across Europe through a network of more than 250 resellers. Crane has established partnerships with many market-leading vendors including Avaya, Nortel, Alcatel, Mitel, BT Network Services and Samsung, which will further broaden Westcon's vendor base. In addition, Crane provides value added services including system design, consulting, technical support, product training and various other professional services.
Crane generated £74 million of revenue in the year ended 31 December 2006. Its EBITDA and EBIT for the year to 31 December 2006 were approximately £2.8 million and £2.1 million respectively. The net assets of Crane are approximately £2.3 million as at 31 December 2006 (assuming that Crane's preference share capital is treated as equity). Normalised net debt at completion, all supporting working capital, is estimated to be approximately £10 million. The acquisition is expected to be earnings-enhancing in the year to February 2008.
