Faritec finalises R54m purchase

Johannesburg, 29 Jun 2006

JSE-listed Faritec Holdings has completed its R54.1 million acquisition of Enterprise Connection, previously held up by a legal spat.

Faritec`s shareholders voted this week in favour of the acquisition, which was first announced last December.

The conclusion of the deal was delayed after a third party instituted legal action against Enterprise Connection and obtained a court order that, among other things, interdicted the Enterprise Connection acquisition until 30 May.

The return date was then postponed to 21 June, which meant the deal could not be implemented before then.

Faritec CEO Simon Tomlinson has repeatedly said the dispute centred on a transaction undertaken by Enterprise Connection in the previous financial year. As Faritec was aware of the dispute, it excluded that transaction from its acquisition of Enterprise Connection.

The interim interdict was withdrawn last week after Enterprise Connection and the third party reached a settlement.

Significant

The Enterprise Connection acquisition is a significant one for Faritec, as it is set to double the group`s size.

It also expands Faritec`s technology portfolio, adding several strategic technology partnerships to existing agreements with IBM, SAP, Microsoft and Symantec.

After the integration of the companies, Faritec will have a staff complement of more than 400.

The combined entity was expected to achieve revenue of more than R750 million and earnings per share of 7.4c for the year to June.

However, Faritec said in a trading update earlier this month that the delay caused by the legal action meant the results, which are expected to be issued on 13 September, would not include Enterprise Connection`s performance.

Despite that, Faritec is expecting to report full-year headline earnings per share of between 9.8c and 10.5c - at least 444% up on the previous year`s 1.8c headline earnings per share.

The Faritec share, which closed untraded at 80c yesterday, also showed no activity by midmorning today.