Datatec, ALT form R800m new BEE company

South African IT group Datatec announced on Tuesday that its South African operations will merge with African Legend Technologies (ALT) to form an R800-million-a-year IT company.

The Datatec businesses will contribute R500-million to the combined entity’s revenue, while the African Legend businesses will contribute an estimated R300-million, Datatec said in a statement.

Datatec will have a 55% shareholding and ALT will hold the remaining 45% in the newly merged entity, to be known as African Legend Indigo.

African Legend Indigo will include Datatec’s RangeGate and the two ALT businesses—African Legend Indigo and African Legend Solutions.

Westcon AME, Datatec’s networking-equipment distributor, will continue to operate as a standalone business. However, ALT will take a 45% shareholding in Westcon AME.

The comparable size and nature of the merged operations is such that no vendor finance will be required to facilitate the deal.
The proposed merger is subject to Competition Commission approval.

African Legend Indigo will be headed by CEO Michael Jacobus, who has led African Legend Indigo for the past three years.

Key African Legend and Datatec executives will take positions on the new board.

According to Jens Montanana, CEO of Datatec, the merger will create a truly black-empowered information and communications technology (ICT) company.

“We are excited about this deal on a number of levels. The merger will create an IT company that is 45% black owned, which is significantly more than the ICT Charter calls for, and we expect it to add significant shareholder value by providing us with the critical mass we need to take the new business to the next level and to consistently achieve the sort of growth recorded by Datatec’s other operations in the United States, the United Kingdom and Europe over the past 12 to 18 months.”

Mashudu Tshivhase, chairperson of African Legend Indigo and ALT, said the fit between the African Legend companies and RangeGate is excellent.

“Culturally there are great synergies,” he says. “And there is a limited overlap in our client base, which presents great opportunity for cross-selling our services across the business.

“Through the merger we will build a strong organisation that will be in a position to make a positive contribution to bridging the digital divide throughout the whole African continent.”—I-Net Bridge

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