Technology services group EOH on Monday announced a major restructuring and said that it had appointed founder and former CEO Asher Bohbot as executive chairperson.
The restructuring would entail the creation of two independent businesses, each with its own identity, growth strategy, go-to market approach, business model and culture.
The businesses that would continue under the EOH brand would focus on end-to-end information communication technology and would grow organically, rather than through acquisitions. These businesses would offer highly proficient systems integration as a market differentiator and would focus on new generation digital technology.
The EOH brand would contribute about 55% to the group’s revenue.
The businesses clustered under NewCo would be specialised and would be equally focused on acquisitions and organic growth. The business units would operate relatively autonomously and would be differentiated by vertical specific offerings.
The NewCo would launch a brand and identity in the next two months, the Johannesburg-based technology services group reported in a statement.
The split is aimed at achieving better managed business diversity, full realisation of each business’ potential, clarity of brand identity, simplified processes, reduced management span of control, increased agility and reversal of diseconomies of scale.
EOH also announced a long-term strategic partnership with black-owned investment firm Lebashe Investment Group that would give it access to a R3.25-billion growth funding facility over a period of five years.
Both companies have identified significant synergistic mutual growth opportunities and, to access those, resolved to form the partnership. Lebashe would subscribe for 40-million new ordinary EOH shares worth R250-million and EOH would gain access to the growth-fund facility. The transaction would also enhance EOH’s black economic empowerment ownership credentials over ten years.
EOH further announced the appointment of founder and former CEO Bohbot as nonexecutive chairperson, replacing Sandile Zungu, who resigned from the board after serving as nonexecutive chairperson for more than four years.
Bohbot, who left EOH in June last year, returned to the group on a full time contract in December, at a time when the company’s share price was battered by forced selling of shares by directors and allegations against former subsidiaries. At the time, the company said that Bohbot would return to focus on “strategy and stakeholder management”.
In addition to Bohbot, EOH also appointed seasoned human resources (HR) executive Tebogo Maentja as executive director for group HR and transformation, and said that Grathel Motau had resigned as a nonexecutive director.
Shares in EOH gained 2.30% on Monday, trading at R7.45 apiece by late afternoon. A year ago, the company traded at about R15 a share.