RealTime IT News

DiData Buys US Company for $70 Million

[Johannesburg, 26 May 2000] - South African networking giants Dimension Data Holdings announced yesterday afternoon that it has bought 100% of the New York-based network integration company Integrated Systems Group (ISG) for $70 million.

The impact of the deal resonates beyond the immediate availability of ISG services which will now be available to DiData customers. In concluding this deal, not only does Dimension Data double their size in the region, but they also obtain immediate credibility in the New York market, crucial should DiData decide to seek a Nasdaq listing.

The deal will become effective from June this year subject to several conditions being met. These conditions include approval from the Reserve Bank of SA as well as from US Anti-Trust Regulators and a due diligence process. An immediate $35 million will be paid by DiData with the balance being paid over a two-year period on an earn-out basis in either cash or shares at DiData's election.

ISG, who generated revenues of $72 million in the year to end-May 2000, will henceforth be known as Dimension Data ISG.

DiData US Director Adrian Liddiard further dispelled any doubts about this being a fringe acquisition when he revealed that ISG operates in a market about eight times that of the entire SA networking market.

The US company generated its entire revenue for last year in the Manhattan and Long Island regions alone, suggesting that in partnership with DiData's New England operations, the new look company could add significantly to DiData's existing revenues.

DiData, who reported cash resources of R2, 4-billion in the interim six month period to March 2000, don't expect to obtain immediate financial benefit from the acquisition. Liddiard comments, however, that once the group's services are rolled-out across the region, the potential for growth is exponential. "ISG is an excellent cultural fit with DiData and shares our vision of the network integration market," he commented yesterday.

"Last year's weak US presence shifted the listing to London"

Nearly 70% of DiData's revenues are generated in overseas markets, but prior to this financial year, hardly any of this came from the US market. The company now expects over 10% of its revenue to emanate from its North American operations.

A weak US presence was one of the reasons why DiData mooted the idea of a Nasdaq listing earlier this year, announcing instead a desire to list on the London FTSE. According to DiData, the company felt at the time that they had not established a strong enough North American presence to ensure a successful listing. This deal could change investor opinion, with ISG being based in the heart of Wall Street territory in New York.

This consolidated US presence is given further emphasis in light of the recent merger of RE/COM and Data Comm Systems in the New England region, with DiData having a $27 million stake in the newly merged enterprise.

In either event, plans to list on the FTSE are still on track with the company looking to raise about #1,5-billion for the listing which is scheduled for the third-quarter of this year.