Faritec to salvage Software Futures

By Kimberly Guest for Software Futures
Johannesburg, 10 Jul 2007

The curators of the now defunct Fidentia Group are in negotiations with JSE-listed IT company Faritec to conclude the sale of Software Futures.

Faritec, which last year completed the acquisitions of Enterprise Connection and Lechabile Storage Solutions, confirms it has been selected as the preferred bidder for the software development house.

Company CEO Simon Tomlinson says he cannot divulge the monetary value of the talks at this stage, as this may prejudice future offers for the company should Faritec's bid fall through.

The news follows the May announcement that curators Dines Gihwala and George Papadakis had sold Software Futures' consulting arm to IndigoCube for an undisclosed sum, in what was in effect a buyout of past and present management.

At the time, parties interested in bidding for the software house were concerned the deal may have harmed the company's value.

However, IndigoCube CEO Themi Themistocleous says the curators probably got a better deal for the rest of the Software Futures business with the consulting arm removed.

"The consulting arm was a relatively new business within the group and still finding its feet. A lot of investment had gone into its establishment and it wasn't as yet profitable. By selling it separately, the curators ensured the rest of the business would go for fair value without the consulting arm bringing about a negative impact."

He adds: "For us, it built on our strategic initiatives around the software development life cycle and business analysis, and so it was worth the cost."

Under hammer

For Tomlinson, the exclusion of the consulting arm is not a concern.

The company expects to benefit from Software Futures' majority assets, which are spread across its custom software solutions, software development training and tool deployment divisions.

Software Futures also has what are believed to be lucrative contracts with cellular network operator Vodacom and financial services group Sanlam.

"The deal will see us securing the jobs of 85 Software Futures employees and continuing services to key customers like Vodacom and Sanlam," says Tomlinson. "These companies are already Faritec customers, so for us it will mean we will be able to grow our portfolio of services to them."

Tomlinson expects the acquisition to enhance Faritec's earnings in the 2008 financial year, increase the company's skills level and boost the company's presence in the Western Cape.

Fitting in

In a statement, Fidentia's curators said Faritec was selected as the preferred bidder because of its strong solution fit, solid empowerment credentials and alignment with Software Futures' existing customers.

"The parties are currently in discussions with a view to concluding the transaction," they added.

Tomlinson expects negotiations with the curators to be finalised within the next week to 10 days.

If the company's bid is successful, the deal will have to be approved by the Competition Commission, which could take another six weeks.