South African based Seacom has agreed to buy two businesses from JSE-listed EOH Holdings, Network Solutions (EOH-NS) and Hymax, for R144.9-million. The proceeds from the sale, net of costs, will mainly be used to reduce EOH debt further as the IT services group continues with its plan to deleverage its balance sheet.
“EOH-NS and Hymax have vast experience in the delivery of wholesale and managed service solutions for the networking and voice segments of the telecommunications industry. EOH-NS and Hymax are also strategic and essential partners to a variety of enterprise clients covering multiple verticals across the private and public sectors,” EOH said in a statement on Thursday outlining the details of the agreement with Seacom.
Seacom CEO Oliver Fortuin said: “The acquisition of EOH-NS and Hymax forms part of Seacom’s ambitious growth strategy that will transform the business into a converged telecoms provider across Africa. By expanding our on-network capabilities and reach with this acquisition, and the acquisition of Hirani Telecom and Africell Uganda’s infrastructure, Seacom aims to provide customers with comprehensive, enterprise-grade ICT solutions and quality connectivity.”
EOH CEO Stephen van Coller said the sale of the businesses is in line with its targeted disposals strategy, which includes the sale of assets that are capital intensive.
“In support of this, and due to EOH’s current capital constraints relative to the mobile network operators, and as the group prioritise creating a fit-for-purpose capital structure, we have looked to ensure that EOH-NS and Hymax can continue investing in world-class infrastructure and maintain their service excellence.”
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The transaction is subject to several conditions, including the unconditional approval of the competition authorities. Seacom will make an upfront payment to EOH of R115.9-million to secure the assets, representing 80% of the enterprise value, upon deal close. The remaining money will be held in escrow for 12 months as security for the payment of any warranty and indemnity claims. Fifty percent of this retention amount will be released after six months, assuming no claims are made.
The value of the consolidated net assets of EOH-NS and Hymax at 31 July 2021 was R70.5-million. The normalised profit after tax of the businesses came to R4.7-million for the financial year ended 31 July 2021.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry