WESTCON ACQUIRES AFINA FOR UP TO EUR50 MILLION

DATATEC LIMITED
(Incorporated in the Republic of South Africa) 
(Registration number: 1994/005004/06)
ISIN: ZAE000017745
Share Code: DTC

WESTCON ACQUIRES AFINA FOR UP TO EUR50 MILLION


Datatec Limited ("Datatec", the Group or the Company, JSE/AIM: DTC) the international Information and Communications Technology (ICT) group, announces that its subsidiary Westcon Inc (Westcon) has agreed to acquire the Latin American and Iberian multinational security, virtualisation and data centre distributor Afina Group (Afina), through the acquisition of its Panamanian holding company GLS Software SA from Araguaya S.A. (the Transaction).  


The Transaction, valued at up to EUR50 million, expands Westcons presence in Latin America, the Caribbean, Europe, and North Africa.  It also broadens and deepens Westcons product portfolio, through the addition of new (or stronger) relationships with strategic vendors such as VMware, Riverbed, Symantec and Citrix.


The Transaction will be settled by the payment of EUR30 million in cash funded from new loan finance and EUR10 million in Datatec shares. The remaining EUR10 million will be paid, in cash in two payments of up to EUR5m each in 2013 and 2014 subject to Afina meeting certain EBITDA performance conditions for each of the two years ending 31 December 2012 and 31 December 2013 as specified in the Transaction agreement.  The effective date of the Transaction is 2 July 2012.


Jens Montanana, Datatec's Chief Executive commented:


We identified Afina more than two years ago as a potentially game changing opportunity for Westcon.  


The Transaction adds major high growth emerging markets to Westcons geographic footprint and cements its leadership role as the worlds premier distributor of networking and security products.  It is a key milestone in delivering on our strategic medium term goal of reaching $1bn of revenues in security related product solutions, and also brings software virtualisation and data centre products to Westcon's solution set.
A 

This acquisition creates unrivalled coverage throughout the Americas, as Westcon gains an immediate on-the-ground presence in Argentina, Chile, Colombia, Venezuela and Peru in addition to coverage across Central America and the Caribbean.  It also adds a significant presence in Mexico which will boost Westcons recently established operations there.  Afinas operations in Brazil will augment Westcons existing strong presence in that market.


Latin America is now entering a robust period of IT spending, with analysts estimating that the region will generate more than $310 billion in IT spending in 2012*.  With the acquisition of Afina, Westcon is very well positioned to capture this momentum.

* source - Gartner March 2012


Afina operates in 12 countries across Latin America, Europe, North Africa and the Caribbean (including Brazil, Mexico, Spain, Portugal, France, and Morocco) with a primary focus on the distribution of security and data centre software. Afinas vendor portfolio is complementary to Westcons existing portfolio, but significantly adds new vendor relationships and expertise in security, virtualisation and data centre technologies, as well as a strong services offering. 


Afina was founded in 1990 and is headquartered in Madrid and Miami.  It employs over 400 personnel and expects revenues this financial year to approach $300m. 


In relation to the Transaction, the pro forma financial effects on Datatecs earnings per share, headline earnings per share, net asset value (NAV) per share and net tangible asset value (NTAV) per share for the period ended 29 February 2012 have been assessed, and are set out in the following table. 


The unaudited pro forma financial effects are the responsibility of the Datatec directors and have been prepared for illustrative purposes only to provide information about how the Transaction may impact shareholders on the relevant reporting date outlined below.  As a result, they may not give a fair reflection of the Companys financial position, changes in equity, results of operations or cash flows after implementation of the Transaction or of the Companys future earnings.


(US cents)                    As reported       Pro- forma     % 

                               year ended      after the     Change

                              29 February 2012  Transaction

Earnings per Share            43.5              43.5          0.1%

Diluted Earnings per Share    42.8              42.8          0.1%

Headline Earnings per Share   43.1              43.1          0.1%
Diluted Headline Earnings 

per Share                     42.5              42.5          0.1%

Underlying Earnings per Share 47.9              49.2          2.6%

NAV per Share                 439               440           0.3%

NTAV per Share                195               180          -7.9%


The pro-forma earnings per share, headline earnings per share, underlying earnings per share, NAV and NTAV have been prepared on the following assumptions:


-	Figures as reported are based on the audited results of Datatec for the year ended 29 February 2012;A  
-	Pro-forma results are based on Afinas normalised audited	 results for the year ended 31 December 2011; 
-	There were 187.7 million Datatec shares in issue at 29 February 2012 including 1.2 million contingently issuable shares for which all necessary conditions had been satisfied at that date; 
-	An interest rate of 3.4 % in Europe, where the cash element of consideration will arise, was used;
-	A tax rate of 30% on interest receivable was applied;

-	The earnings per share pro-forma assumes the Transaction was effected on 1 March 2011;
-	The NAV and NTAV pro-forma assumes the Transaction occurred on 29 February 2012, that the shares were issued and that no contingent consideration was paid on that date;
-	The net assets of Afina at 31 December 2011 were $13.98m, the net debt was $25.48m and the normalised net income after taxation generated from them was $4.2m in the year ended 31 December 2011.

Share issue

2,328,908 ordinary ZAR0.01 shares will be issued to the vendor, Araguaya S.A. in settlement of the Eur10 million of consideration payable in Datatec shares.  Application will be made to the London Stock Exchange for the admission of these shares to the Alternative Investment Market, and to the JSE Limited for the listing of these shares.  Listing on both exchanges is expected to become effective on 11 July 2012.


Datatec will host a conference call today to review the announcement and will also participate in a Q&A session.  The call will begin at 10.30am SA time/9.30am UK time. 


Please dial 0800 200 648 (toll-free) or 011 535 3600 / 010 201 6616 A  from South Africa and 0800 917 7042 from the UK. 


A playback facility will be available for seven working days following the announcement. For South Africa dial 011 305 2030 and for the UK dial 0808 234 6771 (playback code: 21493#). 

Enquiries:

Datatec Limited  (www.datatec.co.za)

Jens Montanana, Chief Executive Officer
+44 (0) 1753 797118
Rob Evans  Chief Financial Officer
+27 (0) 11 233 1221
Wilna de Villiers  Group Marketing Manager
+27 (0) 11 233 1013



Jefferies International Limited  Nominated Advisor and Broker
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Adrian Duffield/Jon Davies (UK)
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Frederic Cornet/Lexi Ball (SA)
+27 (0) 11 447 3030 Sandown
2 July 2012

Sponsor 

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Date: 02/07/2012 08:00:00 Supplied by www.sharenet.co.za                     
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