Datatec will return up to US$500 million (R6.5 billion) to shareholders in the form of a special dividend and/or share buybacks after the Johannesburg- and London-listed technology group completed the sale of its Westcon-Comstor business in North America and Latin America to Synnex.
The bulk of the $630 million in proceeds from the transaction — which also includes the sale of 10% of the remaining part of Westcon — will be returned to shareholders, Datatec said on Friday.
Synnex, based in California, is a $14.1 billion technology supply chain services company that employs about 110 000 people.
Datatec will receive as much as $200 million more as a cash earn-out, subject to Westcon Americas meeting “certain agreed gross profit performance targets”.
The maximum consideration of $830 million equates to an equity valuation of the total Westcon-Comstor division of $1.1 billion.
“The board will review options for the use and distribution of the cash proceeds received on closing of the transaction,” Datatec said in a statement on the JSE’s stock exchange news service.
Datatec intends to retain $130 million for operational and working capital and expansion funding requirements. “The board will consider returning the majority of the remaining $500 million to shareholders by way of share repurchases and/or a specific dividend, but in the meantime the proceeds will be retained in US dollars,” the group said.
Any cash payments received on the earn-out will be returned to shareholders.
Shareholders voted to approve the transaction at a general meeting held on August 30.
“The strategic partnership between Westcon International and Synnex will provide significant growth opportunities for both businesses, while working together to serve vendors and customers globally,” said Datatec CEO Jens Montanana.
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