DATACENTRIX HOLDINGS LIMITED - Acquisition of Infrasol Proprietary Limited

Acquisition of Infrasol Proprietary Limited

DATACENTRIX HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/006413/06)
Share code: DCT ISIN: ZAE000016051
(“Datacentrix” or “the Company”)


ACQUISITION OF INFRASOL PROPRIETARY LIMITED



1. INTRODUCTION
   The board of directors of Datacentrix (“the Board”) is pleased to advise shareholders that Datacentrix has,
   through its wholly-owned subsidiary, Datacentrix Proprietary Limited, entered into a sale of shares
   agreement (“Agreement”) with Pinnacle Holdings Limited (“Pinnacle” or “the Seller”) to acquire 100% of
   the issued share capital of Pinnacle’s wholly-owned subsidiary, Infrasol Proprietary Limited (“Infrasol”)
   (“Seller’s Shares”), together with Infrasol’s wholly-owned subsidiary, Merqu Communications Proprietary
   Limited (“Merqu”), from the Seller, as one indivisible transaction, for a total maximum cash consideration
   of R85 million (“Acquisition”).

2. THE ACQUISITION
   2.1 Nature of the Infrasol business
        The Infrasol business comprises of Infrasol and Merqu which are design and development
        companies with project management expertise focused on large network infrastructure, data centre
        design and the implementation of solution projects that utilise a national footprint of dedicated
        installers to complete assignments.
        Infrasol has five structured business divisions designed to provide its clients with infrastructure and
        services throughout South Africa. These services include:
        -   Installation and maintenance of LAN and WAN infrastructure;
        -   Installation and maintenance of building data and switching centres;
        -   Installation and maintenance of audio-visual solutions;
        -   Full outsource management of ICT infrastructures (seat management); and
        -   Installation and maintenance of Fire Detection and Prevention solutions.
        Merqu’s services include Network Infrastructure, Building Works, Electrical Reticulation, Backup
        Power, Cooling Systems, Fire Detection and Prevention, CCTV, Building Management and Access
        Control.

   2.2 Rationale for the Acquisition
        Initially a product-orientated company, Datacentrix’ strategic focus in recent years has been to
        become a market leader in the Business solutions, Outsource and Managed Services sectors. In line
        with this strategy, Datacentrix wishes to consolidate and strengthen its position by acquiring the
        knowledge and expertise that is inherent to the Infrasol business. Furthermore, the Board believes
        that:
        -   a cultural fit and shared values exist between management of Datacentrix and Infrasol;
        -   the Infrasol business, comprising a well-structured Managed Services and Outsourcing
            operation, would complement and expand Datacentrix’ current service offering;
        -   business synergies and economies of scale will be achieved between Infrasol and Datacentrix;
        -   Datacentrix would benefit from the new skillsets being acquired, which will complement
            Datacentrix’ Outsource business;
        -   Infrasol’s ISO certification in the areas of Quality Management, Health & Safety and
            Environmental Management would be beneficial to Datacentrix; and
        -   Infrasol would be able to leverage off Datacentrix’ mature call centre, command centre and other
            automated technology investments providing further synergies between the two parties.
   
    2.3 Purchase consideration
        The total purchase consideration is an all-inclusive amount of between R65 million up to a maximum
        of R85 million, which will be determined by multiplying the audited profit after tax of Infrasol as at
        30 June 2015 by a PE ratio of 8.5. The purchase consideration is to be settled by Datacentrix by way
        of electronic fund transfer from existing cash resources within 9 business days after the last of the
        conditions precedent referred to in paragraph 2.4 below have been fulfilled or waived, as the case
        may be.
        The Seller has provided warranties which are normal in this type of transaction, together with an
        undertaking that, for a period of two years from the Effective Date, the Seller will not compete with
        Infrasol and/or Datacentrix in the Outsourcing and Datacentre Design, Implementation and Facility
        Management sectors of the information and communication technology industry.

    2.4 Conditions precedent and Effective Date
        The Acquisition is subject to the fulfilment or waiver, as the case may be, of inter alia, the following
        conditions precedent by no later than 30 September 2015, or such later date as agreed to in writing
        by the parties to the Agreement:
        2.4.1.   the Seller obtaining written confirmation from third parties to contracts to which Infrasol is a
                 party, consenting to the change in control of Infrasol;
        2.4.2.   the shareholders of Datacentrix approving the Acquisition; and
        2.4.3.   all requisite regulatory, including JSE Limited (“JSE”) and Competition Commission
                 approvals being obtained.
        The Effective Date of the Acquisition is 1 July 2015.

    2.5 Other salient items
        2.5.1.   For the year ended 30 June 2014, Infrasol recorded profit after tax of R13.4 million.
        2.5.2.   The value of the net assets that are the subject of the Acquisition as at 30 June 2014 was
                 R22.89 million.
        2.5.3.   The pro forma financial effects of the Acquisition on the reported financial information of
                 Datacentrix will be set out in the circular to shareholders detailed in paragraph 3 below.
        2.5.4.   Subsequent to the Acquisition, the Memorandum of Incorporation of Infrasol will be reviewed
                 to ensure it does not prevent Datacentrix from complying with its obligations in terms of the
                 Listings Requirements of the JSE (“Listings Requirements”).

3. CATEGORISATION OF THE ACQUISITION AND CIRCULAR TO SHAREHOLDERS
   The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements. However,
   as Pinnacle is a material shareholder of Datacentrix, the Acquisition constitutes a “related party
   transaction” in terms of the Listings Requirements. The Acquisition will accordingly be subject to an
   independent majority of Datacentrix shareholders voting in favour thereof. A circular incorporating a notice
   convening a general meeting, and providing further details of the Acquisition (“Circular”), will be distributed
   to shareholders in due course.
   The Board has appointed Merchantec Capital (“the independent expert”) to advise the Board as to
   whether the terms of the Acquisition are fair insofar as Datacentrix shareholders are concerned. A
   statement to this effect will be included in the Circular.


Johannesburg
17 April 2015

Sponsor and Independent Expert
Merchantec Capital

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