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South Africa: Didata Raises Cash to Offer $276 Million to Buy Out Datacraft Asia Minorities
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Business Day (Johannesburg)
23 July 2008
Posted to the web 23 July 2008
Lesley Stones
Johannesburg
DIMENSION Data is paying a generous 34% premium to buy out minority shareholders in its subsidiary, Datacraft Asia, in a deal valued at R2,1bn.
The cash offer of $1,33 per Datacraft Asia share will cost $276m, prompting Didata to issue 136-million new shares on the London Stock Exchange.
That will raise £60,2m towards the deal and will increase the volume of issued shares 8%, while the other $156m will come from present cash resources.
Datacraft Asia will then be delisted from the Singapore Stock Exchange. The news sent Datacraft's shares soaring 29% to $1,28 in Singapore, while Didata shares were trading fractionally down at 675c.
Didata has owned the majority 55,1% stake in Datacraft since 1997 and now wanted to own 100%, said Datacraft chairman Patrick Quarmby.
The companies operated similar businesses, he said, and there was no need to keep Datacraft listed as a separate entity. Its shares have been almost static for two years despite reporting growth for 17 quarters in a row, and daily trade in its shares has fallen 92% in the past year.
That meant being listed was no longer a useful share incentive scheme for the managers, and the move would also eliminate the cost of being listed. Paying a 34% premium was not excessive, Quarmby said.
It was in line with other recent deals to privatise companies in Singapore. "It isn't out of the ordinary and we have to get people to vote for it," he said.
Although independent financial advisers still have to declare whether the offer is fair to the minorities, Quarmby said he expected a positive verdict. Its investors include a couple of institutions and the public.
The company installs and manages network infrastructure for companies in 13 countries including India, Singapore and Hong Kong. For the year to September last year it made an operating profit of $37m on a revenue of $580m.
Didata posted an operating profit of $131m on revenue of $3,7bn in that period, so Datacraft contributed about 15% to its revenue and a healthier 28% of its profit. Datacraft will go on trading under its own name, and will not change managers.
Didata was not absorbing it because it needed to implement changes, but to increase its own exposure to an attractive growth market, Quarmby said.
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Didata's policy was to own 100% of global subsidiaries, he said, and Datacraft's separate listing had been an anomaly. The move should also strengthen Datacraft by improving its access to global resources.
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