Datatec is, once again, a billion-dollar company, having added 57% to its value on the public market over the last year.
With operations in more than 50 countries, the group is one of the JSE’s largest ICT services firms. Established in 1986, the company operates predominantly from two main divisions, Logicalis and Westcon International, the latter distributing security and networking technology products.
Having traded as high as R135, the shares are now at about R79. Annual turnover is above R100bn.
CEO Jens Montanana and his team have been fighting to restore the value Datatec has lost over the years. The majority of those losses are attributed to the firm’s international operations — the bulk of its business — which have struggled over the past decade, resulting in a series of corporate actions to slim down the group.
The group assembled a team from global investment bank Lazard to assist in unlocking value. The company said it was considering all options, including separate listings of Logicalis and Westcon International or selling to a larger group.
That strategy appears to be bearing fruit.
The share is up 56.92% over the last 12 months, and 225.63% higher over five years. At 11.44am, Datatec shares were 1.07% firmer at R79.09, valuing the group at R19.35bn, about $1.21bn.
Along the way, deal-making has been on the rise.
On Tuesday, the group said its subsidiary, Logicalis USA, had acquired 100% of Maple Woods Enterprises with effect from February 2.
In January, the group announced that Westcon-Comstor had acquired Real Security, a specialist distributor of cybersecurity products active in eight countries across the Balkans.
The deal is seen as a way for the group to establish a presence in the region.
Montanana said: “Real Security has built a highly regarded cybersecurity distribution platform across the Balkans, underpinned by deep technical expertise and strong partner relationships.”
“This acquisition strengthens Westcon-Comstor’s presence in an attractive, fast-growing market and advances Datatec’s strategy of investing behind specialist, value-added distribution capabilities that help vendors and partners to scale.”
Founded in 2002, Real Security operates across Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Kosovo, Montenegro, Albania and North Macedonia. It connects leading and emerging cybersecurity vendors with value-added resellers, managed service providers and managed security service providers, according to Datatec.
Katherine Thompson of the London-based Edison Group noted that this transaction represents the division’s first foray into the region, adding to the 17 European countries in which it already operates.
“Transaction details were not disclosed and we maintain our forecasts. We view this acquisition as creating a foothold for Westcon-Comstor in the region where it can use its scale to accelerate Real Security’s growth. In addition, it offers the potential to expand the vendor base for both Real Security and Westcon-Comstor and, in the longer term could provide the foundations for a wider product offering.”
In October, Datatec reported a doubling in its HEPS at the halfway stage of its financial year, as it continues to see good demand for its technology solutions and services worldwide.
The group reported a 2.9% increase in revenue to $1.83bn for the six months ended August as gross invoiced income rose 9.4% to $4.09bn.
Earnings before interest, tax, depreciation and amortisation (ebitda) were 35.6% higher at $139m, while HEPS rose to 22c from 10.5c before.
An interim dividend of R1.75 was declared, up 133.3% from a year ago.
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