Mergers, Acquisitions and Financial Results

SA's largest technology company, Dimension Data (Didata), has consolidated its hold on the country's largest internet service provider, Internet Solutions (IS), by buying the 20% it did not own from Old Mutual for an amount estimated to be well over R200m.

While analysts said this would give Didata more flexibility to draft a strategy for IS without having to defer to minority shareholders, it will also increase their earnings from the internet company as liberalisation in the telecommunications industry gains pace.

Didata held 60% of IS until last year, when it bought 20% from Nedcor. Yesterday it said it had bought the last remaining 20% from Old Mutual, which was looking to dispose of non-core assets. Didata, however, was surprisingly coy about revealing the price paid.

While Didata's disclosure does not extend to it revealing the individual market value of its subsidiaries in its annual report, Nedcor valued the 20% of IS it held at R200m at the end of 2004. However, it is likely that the value of Internet Solutions will have increased substantially since that date, and that Old Mutual may have got a lot more.

Didata Africa CEO Allan Cawood defended his company's decision to keep the value of the deal secret.

"We've been quiet because it's not a requirement for the regulatory environment, and it is something that both parties prefer not to reveal," he said.

Said one analyst: "There is very little disclosure in Dimension Data's accounts over the value of their subsidiaries but I believe the ballpark figure would be over R1bn for the whole of Internet Solutions."

Internet Solutions made profits of R75m for the year to September 2005, according to analysts, and a valuation could be made by ascribing a reasonable multiple of those earnings to get a "ballpark price"

Business Day