JOHANNESBURG (02/06/2004) - South Africa's Competitions Tribunal Friday announced that it is has approved the Altech/NamITech merger, with immediate effect, subject to the remedies offered by Altech.
The first remedy is for Altech to dispose of its existing card manufacturing business, Africard, which at present falls within Altech Card Solutions (ACS). This remedy excludes the business within Africard responsible for personalization services, which will remain within ACS.
An additional remedy requires Altech to relinquish its status from that of being an exclusive, to that of being a nonexclusive, distributor of Datacard personalization equipment.
Commenting on the tribunal's approval, the CEO of Altech, Craig Venter, said he was pleased with the decision, which would see NamITech integrated into the Altech stable. "This acquisition is in line with Altech's ICT vision and convergence strategy and will give the group's ICT Division, which includes Altech Card Solutions, Isis and Altech Informatics, a turnover in excess of R1 billion (US$143 million)."
The purchase of NamITech will require Altech to spend around R500m of its current R1.5 billion cash pile to acquire an initial 85 percent of NamITech, prior to re-introducing Pamodzi as a 28 percent shareholder, via an innovative Altech-pioneered BEE funding arrangement.
"It was important to us that Pamodzi should continue as NamITech's Black Economic Empowerment partner," Venter adds. He says that the innovative funding structure eliminated the need for the much criticized SPV loan type arrangement, and enabled the BEE partner's entry into the transaction with a much reduced initial cash outlay.
Venter said the successful acquisition of NamITech would form the basis for Altech's growth in coming years.
Concerning the remedies, Venter said although it was not easy for any company to dispose of a profitable business, the remedies were an important part of obtaining the tribunal's approval. "Altech has already secured a purchaser, approved by the tribunal, for the Africard business, which will allow it to continue as a going concern," he said.
Venter said one of Altech's strengths had always been in capitalizing on the convergence within its three divisions, namely Telecommunications, Multimedia and ICT. "However, there has always been a concern that the group's ICT Division has been lacking the critical mass of the other two divisions. This acquisition now brings our ICT Division into line with our Telecommunications and Multimedia Divisions, and makes it a valuable pillar of equal strength within the group."
Venter is confident that the transaction would realize significant growth potential for the group, given the synergies that existed between NamITech and various Altech companies.
"NamITech's world-class manufacturing, software application development and secure solutions, combined with the products, services and expertise at both ACS and Isis, will provide Altech with operations that offer complete payment technology solutions to the telecommunications and banking industries," he adds.
Venter confirmed that NamITech's technology partner, German-based Gieseke & Devrient GmbH, a global player in the evolving smartcard and related technologies field, would have a 15% shareholding in the company.
Nampak executive director, Rex Tomlinson, comments that Nampak was pleased that such a complex transaction had been approved by the tribunal. He says that NamITech needed a technology home to realize its full potential, and that Altech fitted that role perfectly.