DATATEC TAKES OVER UK HARDWARE, SOFTWARE AND SERVICES COMPANY

Mergers, Acquisitions and Financial Results

Technology group Datatec has made the first move to spend some of the £13,9m it raised through a secondary listing in London, by spending £6m on a UK company.

The target is CSF Solutions, which provides technology hardware, software and services to large businesses.

As CSF specialises in IBM and Hewlett-Packard (HP) technologies, the deal should improve Datatec's relationships with those computer giants. CSF has revenue of £40m and 70 staff, headquarters in London and two regional offices. Datatec is also buying the assets of a data centre CSF Managed Services operates.

The £6m will be settled partly in cash and partly by issuing 419948 new shares in Datatec. The move is the first acquisition since Datatec raised more cash by listing on London's Alternative Investment Market in October.

At the time, CEO Jens Montanana promised to grow the company through a combination of organic and acquisitive growth. It already held $70m in cash and even though the London listing fell short of the £29m target, it still gave Datatec $100m to spend.

The first moves would be to strengthen its network security offerings and grow its presence in the UK, Montanana said, with further acquisitions next year to grow its international footprint, particularly in developing markets. CSF would be folded into the UK operations of Logi-calis, a Datatec subsidiary that focuses on network integration.

The deal gives Logicalis the status of an accredited supplier of IBM z-series mainframes in the UK, making it one of only a handful of companies to hold that status on both sides of the Atlantic.

The acquisition of the data centre also strengthens the ability of Logicalis to manage software services on behalf of its clients, which it sees as a key focus for growth.

Logicalis UK will now have annual revenue of more than $300m, and that will push up the revenue for Logicalis as a whole to $800m from its operations in nine countries. Montanana said the acquisition of CSF significantly strengthened Logicalis UK by letting it provide a complete offering of computing infrastructures and intelligent networks, and strengthening its ability to deliver the services and applications that run on them. For the six months to August, Datatec reported a 16% rise in revenue to $1,67bn, an operating profit up 44% to $43,3m and headline earnings a share of 15,65c.

Business Day