LogicalOptions (LogOpt) has agreed to sell its assets and liabilities, with the exception of its stake in Paracon Holdings, to Brait for R616.7 million in cash, net of all deductions.
Formerly Education Investment Corporation (Educor) LogOpt, which provides recruitment, IT and consulting services to South African and North American companies, has also reported its results for the nine months to 30 September.
LogOpt CEO Charles Rowlinson says the company is very positive about the deal, which will see Cardinalis Investments, a company controlled by funds under the management of Brait, acquire LogOpt for the equivalent of R6.92 a LogOpt share.
"Recent changes to SA`s competition law have limited local acquisition opportunities, and while international opportunitites do exist, the low rating of the LogicalOptions share on the JSE has placed constraints on the group`s ability to conclude suitable acquisitions.
"Thus, prospects are limited to organic growth, which has been disappointing this year, with similar earnings to last year being recorded."
He adds that shareholders have put pressure on the company to distribute surplus cash, which would limit growth prospects even further.
"The offer of a 40% premium on the share price at the cautionary announcement provides us with the opportunity to unlock shareholder value and allows us to continue to grow the business."
Shareholders holding one ordinary share in LogOpt after the disposal will indirectly hold 1.9827 Paracon ordinary shares.
"The purchaser of the businesses of LogicalOptions will hold approximately 34% of LogicalOptions on completion of the transaction.
"This significant investment will enable the strong strategic relationship between Paracon and its shareholders to continue," says Rowlinson.
The deal is subject to regulatory and shareholder approval, as well as the completion of a due diligence exercise by Cardinalis.
Results for the nine months show turnover of R966.3 million, which Rowlinson says was boosted by the acquisition of Dimension Data SilverLine with effect from 1 July, and the inclusion of M Squared and Mercury Technologies.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) amounted to R80.9 million. Rowlinson attributes the eroded EBITDA margin to a tough market both locally and in North America.
Headline earnings totalled R60.5 million or 67c per share.
The LogOpt share was trading 50c or 6.37% up at 835c on the JSE shortly before the close.
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