IT services company Gijima has acquired its former tender rival T-Systems South Africa (TSSA) for an undisclosed amount.
Gijima made the announcement this afternoon after a source informed ITWeb of the development.
According to the source, TSSA parent T-Systems International conducted a review of its global operations and decided to refocus on core operations in Europe and the Americas. TSSA then identified a 100% black-owned company in Gijima as the buyer.
Prior to their marriage, T-Systems and Gijima were embroiled in an ugly R1.5 billion Transnet deal that was eventually won by Gijima in 2018.
In a statement, Gijima says the acquisition transaction is pending Competition Commission approval.
TSSA, owned by T-Systems International, the IT services arm of German-based Deutsche Telekom, has been providing ICT networks, applications and systems to South African companies for over 20 years.
According to Gijima, this transaction is the result of T-Systems International’s strategic review of its global portfolio and its decision to refocus on its core markets in Europe and the Americas.
It adds the transaction will enable Gijima to have access to international IP, expertise and best practices while ensuring Gijima’s current and newly acquired clients receive top-drawer innovation, best in class service delivery, business efficiencies, security know-how, and lastly, securing numerous jobs from the impact of COVID-19.
Successful turnaround
The acquisition of TSSA comes after a successful turnaround strategy for Gijima which focused on implementing an organic growth strategy to enhance its value offerings by working with new clients, highly-skilled staff members, and strengthening its partnership with global OEMs, IT systems and solutions, says the company.
Gijima will also acquire TSSA Cybersecurity Security Operations Centre and staff certificates, allowing access to a wider reach of companies.
Maphum Nxumalo, Gijima’s group chief executive, says: “We are proud of the growth of our business. The transaction is in line with our strategy of servicing our customers in the new digital era. Our main focus remains the organic growth of Gijima, through working closely with our existing clients by continuously being innovative and increasing efficiencies.”
Gijima remains open and keen to make further strategic acquisitions that will enhance its value proposition, says the company.
It notes the signing of this value-enhancing and strategic deal will result in an even more competitive and innovative ICT offering in a rapidly consolidating market.
Gijima will now own a tier three-level data centre, which provides it with improved quality infrastructure to create other economic opportunities and expand its portfolio of services to new markets and clients such as retail, manufacturing, private healthcare and automotive.
“Gijima is a good fit as a new local owner of the TSSA business. This transaction will see two level one BEE leaders, with a long ICT heritage in South Africa, coming together for the mutual benefit of customers,” says TSSA MD Dr Rajan Padayachee.
The companies say Gijima and T-Systems have a successful track record of seamlessly transitioning clients and staff members.
Upon acquisition approval from the Competition Commission and in accordance with applicable legislation, highly-skilled staff members from T-Systems will join the 2 600-strong existing Gijima family.
With 40% of Gijima executive members including Nxumalo previously having worked at TSSA, both companies are confident new clients and staff members will be in good, trusted and sturdy hands.
Transnet tiff
The move comes after T-Systems lost a lucrative government contract. In October last year, T-Systems announced it was walking away from a R1.5 billion contract with state-owned freight and logistics company Transnet, and dropping a legal battle.
Transnet and T-Systems had, for some time, been at loggerheads over the R1.5 billion contract, which was awarded to T-Systems in 2017, but which Transnet’s previous board later decided it wanted to award to IT services company Gijima.
In October 2017, Transnet filed a declaratory order in the Johannesburg High Court to set aside its February 2017 decision to give T-Systems the IT data services contract, or alternatively confirm Transnet itself has the power to rescind its earlier decision and instead give the contract to Gijima.
T-Systems, the IT services arm of Germany's Deutsche Telekom, last year said it planned to cut 10 000 jobs in a three-year drive to return to profitability. About 6 000 of these job cuts will be in Germany, it said. The aim of this action was to change company loss to profit.
Following the announcement, the South African business said it was restructuring its business locally.
T-Systems’ name was also dragged into the mud during the Gupta scandals, with media reports questioning some of the company's new enterprise development suppliers that worked on Transnet and Eskom.
However, the company strongly denied the allegations, with former MD Gert Schoonbee telling ITWeb that “we are not a Gupta company”.
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