WorldCom subsidiary UUNET Technologies is to pay $138.5 million to buy Internet service provider UUNET SA from Datatec. That amounts to about R1.09 billion at this morning`s exchange rate.
Datatec says the proceeds of the sale, which was agreed to in principle in November last year, will be used to reduce debt, fund acquisitions and to buy back Datatec shares.
The group says the disposal of the 76% interest in UUNET SA will allow it to focus on its core businesses of network equipment distribution and e-business integration.
The purchase price will be paid in cash once all conditions precedent have been met.
The disposal, had it taken place in the six months to 30 September 2000, would have seen Datatec`s headline earnings per share at 196.9c for the period instead of the reported 165.8c.
The net tangible asset value would have been 2 012.1c instead of 1 200.8c.
"It was always the long-term intention of Datatec and UUNET Technologies for UUNET Technologies to increase its investment in UUNET SA to at least a controlling interest," says Datatec executive chairman Jens Montanana.
"From Datatec`s perspective this was due to our long-term global strategy to operate in areas such as network equipment distribution and e-business integration and services rather than global Internet service provision.
"The sale of UUNET should be seen as one of the steps in our plan to allow the full value of every operating entity in the group to be reflected through its listing, sale or realignment."
The next phase in Datatec`s strategy is the listing of US subsidiary, Westcon, which recently filed an initial public offering registration with the Securities Exchange Commission.
Westcon, of which 85.2% is owned by Datatec, says in its prospectus that it aims to use proceeds of the listing to reduce debt.
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