Simeka's Take over of Sahara is Off in South Africa
The ambitious R867m takeover of computer manufacturer Sahara by the far smaller technology group Simeka BSG has been scrapped, only four days after the pair announced the deal. Simeka CEO Mohammed Varachia would not give the exact reason for the U-turn, but said issues uncovered during due diligence investigations made the Simeka board decide not to proceed.
"In the process of finalising all the terms of the agreement with the lawyers and the commencement of due diligence, some material issues started to emerge," he said. "Running this kind of process has huge cost implications and our view was that it was best to step away. It would have cost R2m-R3m to continue and I'm glad we were able to pick up these material issues right at the start," he said. "Had we continued it would have been prejudicial to our shareholders."
Simeka, with revenue of R447m a year, had intended to buy the R1bn-a-year-generating Sahara, one of the largest hardware resellers in southern Africa.
When they announced the deal, Sahara and Simeka spoke of growing their businesses faster as a merged entity . About 70% of Sahara's revenue comes from assembling and distributing notebook computers, with the rest earned by reselling imported computers and printers.