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Datatec signals to shareholders a transaction is coming

The owner of Logicalis and Westcon has signaled to shareholders that a significant transaction is in the works

The world of distribution has seen some serious consolidation in the last year and that might be set to continue with South African firm Datatec signalling it is potentially about to make a transaction.

Ingram Micro being sold to a Chinese buyer, Tech Data snapping up Avnet TS and the emergence of the Nuvias Group have all shaped some of the headlines and discussion in the industry.

The next to get people talking could well be Datatec, the owner of Westcon and Logicalis, which has issued a cautionary statement to warn shareholders of a potential acquisition.

"Shareholders are advised that Datatec has entered into negotiations in relation to a transaction by the Company, which, if successfully
concluded, may have a material effect on the price of the Company's
shares," the firm stated.

"Accordingly, shareholders are advised to exercise caution when dealing in their Datatec shares until a further announcement is made," it added.

No further details were given over the timetable of a deal and the nature of the transaction, with it more than possible the firm could be disposing of an asset as well as pursuing the option to acquire extra market coverage.

The timing of the cautionary statement means that the firm will not be issuing its interim management statement.

In its last set of results, interim numbers for the six months ended 31 August 2016, Datatec revealed its revenues and EBITDA were both down year on year.

It warned that emerging markets were showing signs of a slow recovery and the move to transform the business processes at Westcon would take until June this year.

Jens Montanana, chief executive of Datatec, said that the firm was expecting a better 2017 after revealing that the first fiscal half year had been a challenge.

“The Group’s results for the first half of FY17 have been affected by challenging global conditions, with a strong US Dollar continuing to impact translated earnings. There are now however signs of improved confidence in emerging markets and we expect a continued slow recovery in these markets, with more stable currencies," he said.

Those numbers from October last year could be read as indicating that the firm needs to invest to offset the issues in the emerging markets or alternatively could be a trigger to encourage the firm to dispose of assets in those areas.

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