Datatec in talks for sale of Wescon-Comstor stake
JSE-listed information and communications technology (ICT) company Datatec on Friday issued a cautionary as it mulls the sale of its major share in Westcon-Comstor’s operations for more than $800-million.
In January, the group had entered into negotiations for a possible transaction, subject to contract and exclusivity provisions, Datatec said in a trading update.
Datatec said it would update the market further in due course; however, it noted that there was no certainty that the transaction would be completed, or under what terms, as yet.
This emerges as a worse-than-expected performance from Westcon-Comstor contributed to Datatec’s expected decline in earnings for the financial year ended February 28.
The group’s earnings per share (EPS) and underlying EPS, as well as headline earnings per share (HEPS), for the year under review are expected to be more than 50% lower than the prior year.
Datatec’s underlying EPS for the 2017 financial year are expected to be at least 16c lower than the 32c reported in the prior year.
HEPS and EPS are also expected to drop by at least 10c below the respective 19.4c and 19.3c reported in the 2016 financial year.
“There was a decline in fourth-quarter financial performance in the Europe, Middle East and Africa (EMEA) region. Westcon-Comstor experienced disruption to the business as a result of final stages of SAP implementation in EMEA,” Datatec explained.
Westcon-Comstor has made adjustments to the operating model, which Datatec expects will support a rapid recovery, while Logicalis’s trading was in line with management’s expectation.
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