Mergers, Acquisitions and Financial Results

Two years after announcing plans to buy itself out of the Dimension Data stable, black-empowered Choice Technologies has found an investor to fund the move.

Choice approached the National Empowerment Fund (NEF) to make a threefold investment in its business by acquiring the 49% of its shares held by Didata, paying off its debts and lending it money to grow the business.

The parties are not disclosing the amount involved, but two years ago Choice said it needed R18m to buy its freedom. The NEF will warehouse the shares until Choice generates enough cash to buy them back, or finds another broad-based empowerment group to buy them.

The loan from the NEF at a favourable interest rate will be used to strengthen the balance sheet and fund new growth.

Choice had not wanted another technology firm to buy its shares as that would have replicated the problem of being owned by Didata, Choice CEO Semela Tseka said yesterday. "We have learned from our mistakes that a black empowerment company can't have its competitor as an investor because you compete for business and it becomes ugly," he said."You end up killing each other."

Choice was important to Didata as one of the few black divisions within the largely white group, so Didata was reluctant to cut it loose for fear of losing what little empowerment credibility it had. That impasse ended when Didata sold 25% of its South African business to a black consortium for R380m. Didata has now sold its shares in Choice to the NEF at a substantial discount in a move to support black enterprises, said Didata SA's chief financial officer, Sean Joubert.

Business Day