Westcon acquires Afina for up to €50 million

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Datatec Limited announces that its subsidiary Westcon Inc has agreed to acquire the Latin American and Iberian multinational security, virtualisation and data centre distributor Afina Group (“Afina”), through the acquisition of its Panamanian holding company GLS Software SA from Araguaya S.A.

The Transaction, valued at up to €50 million, expands Westcon’s presence in Latin America, the Caribbean, Europe, and North Africa. It also broadens and deepens Westcon’s product portfolio, through the addition of new (or stronger) relationships with strategic vendors such as VMware, Riverbed, Symantec and Citrix.

The Transaction will be settled by the payment of €30 million in cash funded from new loan finance and €10 million in Datatec shares. The remaining €10 million will be paid, in cash in two payments of up to €5m each in 2013 and 2014 subject to Afina meeting certain EBITDA performance conditions for each of the two years ending 31 December 2012 and 31 December 2013 as specified in the Transaction agreement. The effective date of the Transaction is 2 July 2012.

Jens Montanana, Datatec’s Chief Executive commented “We identified Afina more than two years ago as a potentially game changing opportunity for Westcon.

“The Transaction adds major high growth emerging markets to Westcon’s geographic footprint and cements its leadership role as the world’s premier distributor of networking and security products. It is a key milestone in delivering on our strategic medium term goal of reaching $1bn of revenues in security related product solutions, and also brings software virtualisation and data centre products to Westcon’s solution set.

“This acquisition creates unrivalled coverage throughout the Americas, as Westcon gains an immediate on-the-ground presence in Argentina, Chile, Colombia, Venezuela and Peru in addition to coverage across Central America and the Caribbean. It also adds a significant presence in Mexico which will boost Westcon’s recently established operations there. Afina’s operations in Brazil will augment Westcon’s existing strong presence in that market.

“Latin America is now entering a robust period of IT spending, with analysts estimating that the region will generate more than $310 billion in IT spending in 2012. With the acquisition of Afina, Westcon is very well positioned to capture this momentum.”

Afina operates in 12 countries across Latin America, Europe, North Africa and the Caribbean (including Brazil, Mexico, Spain, Portugal, France, and Morocco) with a primary focus on the distribution of security and data centre software. Afina’s vendor portfolio is complementary to Westcon’s existing portfolio, but significantly adds new vendor relationships and expertise in security, virtualisation and data centre technologies, as well as a strong services offering.

Afina was founded in 1990 and is headquartered in Madrid and Miami. It employs over 400 personnel and expects revenues this financial year to approach $300m.

In relation to the Transaction, the pro forma financial effects on Datatec’s earnings per share, headline earnings per share, net asset value (“NAV”) per share and net tangible asset value (“NTAV”) per share for the period ended 29 February 2012 have been assessed, and are set out in the following table.

The unaudited pro forma financial effects are the responsibility of the Datatec directors and have been prepared for illustrative purposes only to provide information about how the Transaction may impact shareholders on the relevant reporting date outlined below. As a result, they may not give a fair reflection of the Company’s financial position, changes in equity, results of operations or cash flows after implementation of the Transaction or of the Company’s future earnings.

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