JSE-listed EOH’s wholly-owned subsidiary EOH Mthombo has entered into a share purchase agreement (SPA) to dispose of 100% of the issued shares of Hoonar Tekwurks Consulting South Africa (HTCSA), Managed Integrity Evaluation (MIE), Xpert Decision Sytems (XDS) and Zenaptix, collectively referred to as Information Services, to Bachique 842.
The transaction is subject to the fulfilment or waiver, to the extent permissible, of various suspensive conditions.
Information Services provides credit checks, background screening and big data, analytics and technology in South Africa.
The Information Services platform provides access to a rich pool of data across its business units, allowing it to provide unique insights to clients, EOH states.
It notes that Information Services has evolved over the years from a data provider to a holistic solutions provider for risk mitigation and data analysis tools, with each division focusing on a specific sub-set of data-driven solutions.
HTCSA focuses on data engineering and risk management; MIE on background screening and vetting; XDS on credit information bureau; and Zenaptix on software development covering various aspects of big data.
The buyer is a company incorporated under the laws of South Africa and is currently a wholly-owned subsidiary of LR Africa Holdings.
LR Africa Holdings is advised by Lightrock, a global private equity platform.
Since 2007, Lightrock and its predecessors in title have invested in companies that pursue scalable and tech-driven business models around the key impact themes of people, planet, and productivity/tech for good, EOH notes.
The transaction is in line with EOH’s stated strategic intent of disposing of a targeted group of intellectual property companies as part of the group’s deleveraging processes and represents a significant milestone in the implementation of these processes.
The achievement of a more sustainable capital structure will allow the group flexibility to execute its long-term growth strategy.
EOH says it is confident that Lightrock is the right partner to unlock Information Services’ full potential, enabling both future growth and international expansion in its operations.
Subject to the fulfilment or waiver of the suspensive conditions, closing will take place on the last business day of the month in which the last suspensive condition is fulfilled.
The cash consideration payable by the buyer on the closing date will be calculated with reference to an enterprise value of R445-million and shall be an amount equal to the base purchase price of R417-million adjusted for final net debt and working capital benchmarks, certain one-off items and locked box adjustments as at July 31, 2021.
Interest will accrue on the cash consideration from the locked box date up to (and including) the closing date.
The buyer will fund the purchase consideration from equity and third-party debt.
The proceeds of the transaction, net of costs, will assist EOH in creating a more sustainable capital structure and will primarily be applied to reduce debt, it says.