Datatec sells Westcon-Comstor to Synnex for $830m

DUAL-listed South African Information and communication technology group Datatec said yesterday that it had sold its Westcon-Comstor Americas business to Synnex for $830 million (R10.59 billion) as the two groups look to create a major player in the North American technology distribution market. Datatec shares rose 10.53 percent on the JSE yesterday to close at R56.48.

Jens Montanana, Datatec’s chief executive, said that post-transaction, the Westcon-Comstor businesses would work seamlessly together for its vendors and customers globally, enabling it to unlock further potential for Westcon International.

“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.

“The transaction also realises value for our shareholders as a result of the strategic relationship with Synnex through its shareholding in Westcon International,” Montanana said.

As part of the deal, Montanana will join the Synnex board of directors as a non-executive director.

Datatec’s last financials saw group revenue down 5.8 percent to $6.08bn from the previous period, while its profits fell from $48.4m to $10.7m.

Westcon-Comstor accounted for 74 percent of the group’s revenue. And with the group’s revenue having gone down, Asia Pacific and Latin America were the only regions not recording lower revenue, with the Asia Pacific revenue having been $488m for the year ended February.

Datatec first announced in January that it was in discussions over a mysterious “transaction” related to a portion of its business.

Under the terms of the deal Synnex will acquire 100 percent of Westcon Americas for up to $800m and also take a 10 percent stake in Westcon International for a further $30m.

The deal price consists $500m in stock and $100m in cash at closing and an additional $200m cash earn-out payment subject to Westcon Americas financial year 2018 performance.