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Telkom makes R2.7bn cash offer for 100% of Business Connexion

May 22, 2014 • Top Stories

BCX CEO, Benjamin Mophatlane

BCX CEO, Benjamin Mophatlane

Telkom SA SOC (Telkom), South Africa’s listed full service ICT provider, today announced that it has made an offer by entering into an agreement with Business Connexion Group (BCX) in terms of which Telkom will acquire 100% of BCX.

BCX is a listed company and a leading player in the South African ICT services market, with strong capabilities in Managed IT Infrastructure, including Data Centres and Application Development.

In terms of the offer Telkom will acquire, for cash, 100% of the BCX share capital by means of a Scheme of Arrangement at a price per share of R6.60, representing a total cash consideration to BCX shareholders of approximately R2.7bn.

The offer is fully financed and represents a premium of 22% to the volume weighted average share price of R5.38 for the 60 trading days prior to BCX’s cautionary announcement on 15 April 2014.

Telkom intends to strengthen and seek growth opportunities for its South African operations and to support expansion of BCX’s current footprint on the African continent.

Commenting on the offer, Telkom Group CEO Mr Sipho Maseko said Telkom believes that this acquisition will create an ICT company which will address the technology and communication needs of South African businesses nationally.

“A key consideration of our strategy is to grow beyond our core business of connectivity and expand into end-to-end ICT services.This will form part of the strategy to improve performance and restore profitability,” said Maseko.

According to BCX CEO, Benjamin Mophatlane, this would be a significant step forward for Business Connexion as part of the company’s own convergence strategy. “It will increase our ability to meet our customers’ needs through integrated end-to-end solutions.”

The proposed acquisition is in line with the global trend of IT and Telecoms convergence driving the development of rapidly changing products and services and re-shaping the overall IT and Telecoms business landscape. This convergence trend has seen many traditional IT companies merge with telecommunications companies and is fundamental to the strategies of trailblazing companies such as Google, Apple and Amazon.

Telkom believes that its offer represents substantial value to BCX shareholders. Telkom’s offer is fully-funded and a full detailed due diligence was undertaken and completed.

It is the Company’s view that the offer is in the best interests of BCX, its stakeholders and the long-term telecommunications interests of South Africa and the African continent. The proposed transaction will enable BCX shareholders to dispose of their shares at a premium to the recent historical traded market price of the shares.

In the event that the schemes are successfully implemented, BCX will become a wholly owned subsidiary of Telkom and its listing on the JSE will be terminated.

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