Business Connexion Acquires Selected UCS Businesses
Business Connexion Group Limited and UCS Group Limited have entered into an agreement that will see Business Connexion acquire targeted UCS services businesses, thereby consolidating the Group’s dominance as an ICT service provider in the demand-based retail industry. The targeted entities will continue to operate in their current form and under the UCS brand.
The merged services division will allow Business Connexion the economies of scale to leverage their existing infrastructure in providing on demand cloud-based services, as well as enhancing their African growth strategy. UCS shareholders will have a significant shareholding in the largest listed SA owned ICT company, with a combined workforce of over 6,000 skilled IT personnel. All shareholders will benefit from the combined offering to the market.
With revenues in excess of R5.5 billion, the enhanced balance sheet and market capitalization of the business will provide the merged entity with even greater opportunities for key technology investments.
The combination of UCS’s strong retail expertise in both technology and applications together with Business Connexion’ strength in data centre’s and service delivery provides exciting opportunities for customers, especially within the retail sector.
The UCS services businesses which form the basis of the transaction are Accsys, CEB Maintenance, Destiny E-Commerce, UCS Solutions and UCS Technology Services.
Dean Sparrow, Deputy CEO of UCS said: “On conclusion of the transaction, UCS will become the largest single shareholder in Business Connexion. For UCS shareholders, this is an opportunity to retain their shareholding in a well-traded IT stock, as well as to unlock value. It is also an opportunity for UCS to execute its strategy to separate out the service businesses from the software businesses. It is a win-win outcome for all concerned.”
Business Connexion will acquire the assets for approximately R614 million and will be settled partly by the issue of 101 million new Business Connexion shares as considerations for the proposed acquisition, resulting in current UCS shareholders representing a 25% plus one share in the issued share capital of Business Connexion. The balance will be paid in cash.
The proposed transaction is dependent on the fulfillment or waiver of certain conditions prior to implementation including inter alia the passing of various resolutions by the Business Connexion and UCS shareholders in general meetings as well as the approvals of the Competition Authorities and relevant regulatory authorities. A circular containing full details of the proposed transaction will be posted to Business Connexion and UCS shareholders in due course.
The proposed transaction enjoys full board support and the transaction is expected to be finalized within the first quarter of 2011. Strategic synergies will be extracted from the merged entity. UCS senior management will continue to manage the UCS retail services businesses to ensure continuity, and to retain relevant skilled and experienced management.
Benjamin Mophatlane, CEO of Business Connexion said: “This transaction heralds the creation of a leading African ICT services business, in line with Business Connexion’s strategy to become market leaders in providing on-demand cloud-based services integral to the retail industry. The market has seen a number of consolidations within this sector, with a bias towards stronger economies of scale and more extensive delivery capacity.
We will look to capitalise on the new growth opportunities that this merger brings. We look forward to an ongoing and strategic partnership with the remaining UCS group over the long term.”