MERGERS, ACQUISITIONS AND FINANCIAL RESULTS
Fujitsu Siemens Takes On Black Partners in South Africa
Fudjitsu Siemens Computers is selling a quarter of its local subsidiary to black investors, becoming the first major global computer maker to sell equity in an empowerment deal.
The value of the move has not been disclosed, but it sees Thuthukani Information Technology Services, a black-owned supplier of technology infrastructure, and Amava Holdings pay a discounted rate for 25% plus one share.
Amava is an investment group focusing on the hi-tech sector and promising to add technical and operational input as well as a black shareholder profile. The consortium also includes a broad-based black empowerment trust.
While Fujitsu Siemens is the first global computer maker to sell shares to black investors, it is not the first multinational hi-tech player to do so, since Cisco Systems, EDS and T-Systems have already struck equity deals.
Yet several US multinationals protested vehemently when the sector was drawing up an empowerment charter, and the US Chamber of Commerce intervened. The result was the creation of "equity equivalents" whereby multinationals can calculate the value of 25% of their local operations and invest that sum into schemes such as training and social responsibility initiatives. Computer maker Hewlett-Packard opted to invest in a training institute to educate graduates wanting to join the industry.
Last week, local MD Idris Suleman said Fujitsu Siemens had sold shares "because we are European". The move also differed from previous deals because it did not involve the big names of black business.
Numerous potential partners had been interviewed over two years, and most had very little to offer, Suleman said. "It was more about name dropping than anything else -- someone knew Thabo Mbeki and someone else knew Jacob Zuma. I was looking for an entrepreneurial company I could work with, but very few of them understood the IT business."
The Thuthukani consortium had proposed "exciting, entrepreneurial thinking that we hadn't seen from the other partners we interviewed". Fujitsu Siemens Computers will now work on various contracts with Thuthukani, and Thuthukani MD Fannie Mahlangu and Amava Holdings CEO Puven Ramasamy will influence its strategies and grow its empowerment process.
Fujitsu Siemens probably claimed 10% of the computer market in SA, said its alliances manager, Danny de Beer. That could increase dramatically once news of its black profile reached potential customers.
The company had not lost any tenders because of its lack of empowerment, as it had simply not bid for deals it was unlikely to win. Now it could win more contracts from corporate buyers and the public sector, De Beer said. SA contributes about 2% of the company's overall global revenue.