Johannesburg, 08 Nov 2007
Global software vendor Microsoft is to acquire about 12% of the issued shareholding in Blue Label Telecoms.
The deal forms part of Microsoft`s emerging markets strategy, says local MD Pfungwa Serima. Excluding investments in its own South African operations, the deal is Microsoft`s largest single financial outlay in the local market.
Blue Label, a local distributor of prepaid cellular products and related services, is preparing to list on the JSE on 14 November. The company yesterday informed the market it had entered into a "strategic relationship" with Microsoft. The 12% shareholding acquisition is only one part of this arrangement, it said.
The companies declined to disclose the value of this acquisition. However, ITWeb has calculated the price to be between R513 million and R602 million if the proposed issued share capital remains at just over 743 million shares.
Spread the love
Serima says the companies will work closely together to build on existing markets and drive growth into new areas.
"Our strategy at Microsoft has been to take our products and services closer to people. We will be collaborating closely with Blue Label around co-distribution and markets across both companies` networks," he explains.
A significant opportunity for Blue Label will be Microsoft`s eagerness to introduce the company into its African markets where the distributor does not have a presence. The partners will also look at entering new markets together.
Should this partnership prove to be as successful as it expects, it could see Microsoft considering facilitating Blue Label`s entry into its established markets, says Serima.
The deal with Blue Label may not be the only investment the vendor`s headquarters makes in SA.
"Microsoft is very interested in what is coming out of SA. More investments could follow," explains Serima.
Microsoft`s share acquisition will take place after Blue Label has completed its private placement and investment agreements. Analysts believe this private placement is already oversubscribed.
Blue Label is unable to provide further comment prior to its listing.
Related story:
Blue Label heads to bourse
Share