Allied Electronics Corporation Limited (Altron) subsidiary, Altech, will dispose of its 8.6% stake in Liquid Telecommunications Holdings Limited (Liquid).
Altech acquired the 8.6% stake as part of the disposal of its East African operations to Liquid in February 2013. The aforementioned agreement included a put option for the greater of US$50 million or fair market value of the shares.
An announcement on Friday 10 January 2014 confirmed that the put option had been exercised by Altech and the value of the stake was agreed between the parties at US$55 million. The consideration is payable to Altech on 28 February 2014.
Liquid is an independent telecommunications provider for international, voice, internet and data traffic, supplying fibre, satellite and international carrier services to fixed and mobile telecommunications operators, internet service providers and enterprises in developing countries.
Liquid operates and owns one of Africa’s most extensive fibre optic networks spanning over 13,000 kilometres, which provides services to customers in Kenya, Uganda, Rwanda, Zambia, Zimbabwe, Botswana, Democratic Republic of Congo, Lesotho and South Africa.
The consideration, equivalent to R588 million, will be applied toward Altron’s newly acquired debt that was incurred when Altron bought out the minorities in Altech and delisted it from the JSE for a total consideration of R1.8 billion.
Following the delisting of Altech, Altron established the new Altron TMT division which consists of both the Altech and Bytes businesses. The new division aims to consolidate the telecommunications, multi-media and IT assets in the group, grow revenues and minimise costs.
“Our investment philosophy is to have significant stakes in businesses. Although the investment in Liquid was performing very well, our 8.6% was not a significant stake and we believe the funds can be more effectively applied elsewhere,” said Robert Venter, Chief Executive of Altron.
“We have enjoyed a very constructive relationship with Liquid over the past eighteen months, since we first started our negotiations on our East Africa disposal and we will continue to explore mutually beneficial opportunities with them, in Africa,” said Craig Venter, Group Executive: Altron TMT/ Chief Executive Officer: Altech.
This was supported by Robert Venter who said that the divestiture from Liquid was not an indication that Altron does not see investment in Africa as a core part of its strategy. Altron has in fact grown its business into Africa through organic ventures and following its customers into the region.
“Our retail and banking customers have expanded aggressively into Africa and we remain their supplier of choice with regards to IT and multi-media products and services,” said Robert Venter.
Powertech, part of the Altron Power division has also established a business unit to service sub-Saharan Africa with power electronics such as cables, transformers and switchgear with recent significant orders received from Ghana and Zambia.
The Altron group will continue to explore potential niche acquisitions and other opportunities to streamline the group.