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By | Team Register 11th July 2006 14:08

Datatec makes BEEline for SA merger

Critical mass

Datatec, the South African-owned networking dealer, is merging its home country operations with a black-owned business, African Legend Technologies (ALT). The enlarged group is to be called African Legend Indigo (ALI) and has pro forma annual revenues of R800m (c. £61m)- of which Datatec contributes 500m (£38m) and ALT the rest.

Datatec will take a 55 per cent stake in ALI, and ALT will take 45 per cent. Datatec's local distribution business, Westcon AME, will continue as a stand-alone operation, but ALT will take a 45 per cent stake in the business.

Now for a quote from Jens Montanana, CEO of Datatec:

"The merger will create an IT company that is 45 per cent black owned, which is significantly more than the ICT Charter calls for, and we expect it to add significant shareholder value by providing us with the critical mass we need to take the new business to the next level and to consistently achieve the sort of growth recorded by Datatec’s other operations in the US, the UK and Europe over the past 12 to 18 months."

Black economic empowerment is the South African government's version of Affirmative Action and is intended to combat the effects of Apartheid. Among other things, it establishes quotas for black ownership companies in several important economic sectors. The black economic empowerment (BEE) charter for South Africa's ICT sector came into effect last year, setting a target of that a minimum of 25 per cent of an ICT company's equity should be owned by blacks by 2009. ®

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