South African tech giant Datatec has confirmed that they will be selling Westcon-Comstor for R10.5 billion ($830 million).
The JSE and Nasdaq-listed tech company announced on Tuesday that it will sell Westcon-Comstor North America and Latam operations for up to $800 million to SYNNEX.
SYNNEX will also acquire 10% of Westcon International for $30 million and have an option to acquire a further 10% within 12 months after completion of this deal.
The company said the maximum consideration of $830 million equates to an equity valuation of the total Westcon-Comstor division of $1.1 billion.
Jens Montanana, Datatec CEO, will be appointed to SYNNEX’s board. SYNNEX will also have the right to representation on the board of Westcon International.
The deal creates major player in North American technology distribution market and the complementary partnership provides significant growth opportunities for both businesses.
“Westcon-Comstor North America will benefit substantially from being part of a bigger business with a much larger addressable market – and so will our shareholders with our stake in SYNNEX,” Montanana says.
“The transaction also realises value for our shareholders as a result of the strategic relationship with SYNNEX through its shareholding in Westcon International – a business which is yet to benefit from the ERP and BPO transformation programmes currently being implemented.”
Receiving SYNNEX shares as part of the consideration will provide Datatec’s shareholders with a material investment in this Fortune 500 company.
The board of Datatec sees significant potential for growth in the value of its investment in the technology distribution sector through the 10.25% holding in SYNNEX and the operational synergies of the enlarged SYNNEX business.
Westcon-Comstor’s specialisation and expertise in security, unified communications and collaboration (UCC) and networking combined with SYNNEX’s significant North American presence, extensive product line and large customer base will provide for greater scale in services and capabilities for its partners.
SYNNEX’s current market capitalisation is about $4.5 billion and in its last financial year for 2016 it reported revenue of $14.1 billion and EBITDA of $516 million.