Allied Electronics (Altron) has entered into a R360-million deal to buy identity security provider Ubusha Technologies to strengthen its existing capability in the information technology (IT) security market.
Through subsidiary Altron TMT, the group inked a share sale agreement with Ubusha holding company Gydan Investments, with an anticipated effective date of March 1, 2020.
“The board is of the opinion that the acquisition of Ubusha will materially enhance [Altron’s] security capabilities, accelerate its market positioning and provide a strong and strategic platform for the creation of a stand-alone security business,” the firm said in a statement to shareholders on Monday.
Ubusha enables dynamic authentication and authorisation, identity management and governance and privileged account security for local and international banking, financial services, insurance, telecommunications and retail customers.
“Altron is already a significant player in IT security and, together with Ubusha, will also be the industry leader in identity security in Africa, an increasingly critical component of the security market,” the company added.
The transaction will enable Altron to offer customers a securely managed identity profile for their clients across devices, platforms and locations, while Ubusha will have access to new markets and customer segments.
The purchase consideration of a maximum of R360-million equates to a nine-time earnings before interest, taxes, depreciation and amortisation (Ebitda) multiple based on warranted Ebitda of R40-million for the 12 months ended February 29, 2020.
The acquisition remains subject to conditions precedent, including Competition Commission and regulatory approvals and the successful conclusion of service contract commitments with key managers and staff.