Dimension Data (Didata) has acquired California-based Nexus in a deal that boosts the company’s aspirations to double its revenues to $12 billion (R126bn) a year by 2018.
The acquisition, for an undisclosed sum, is the second major deal of this nature for Didata, a multibillion-dollar enterprise with a presence in 58 countries worldwide and reach in 114 countries through a partner network. It now is a wholly owned subsidiary of Nippon Telegraph and Telephone (NTT) Corporation, the largest telecoms provider in Japan.
By acquiring Nexus, Didata would be expanding its operations in the US by 40 percent, the company said in a statement published in South Africa last night.
Nexus has 19 offices in California, Nevada, Colorado, Arizona, Utah, Washington, Texas, Georgia, Florida and North Carolina. “As a result, clients will now have access to a deeper network of experts and a broader portfolio of solutions.”
Didata will absorb 657 Nexus employees. “Nexus brings a rich set of services and solutions to the group,” Mark Slaga, the chief executive of Didata’s operations in the Americas, added.
Nexus provides solutions based, among other things, on security, enterprise networking, managed services and cloud computing.
During an interview last May, Brett Dawson, Didata’s group chief executive, said the company had experienced greater demand from customers for services through cloud computing.
In February, Didata bought NextiraOne and withheld the purchase price. Nextira designs, installs, maintains and supports business solutions and communications services for the private and public sector. It had just over 1 800 staff in countries including Austria, Belgium, Czech Republic and Germany.
When NTT acquired the company in 2010 for R24.4bn, its chief executive told reporters in London that Didata, which began as a start-up in South Africa in 1983, would be core to NTT’s global strategy.
To buy or not to buy private labels could be a crucial buying decision for most shoppers. Industry reports suggest that private labels are gaining traction due to financial difficulties faced by consumers.
Household spending is likely to continue to moderate due to a slowing of income growth and increases in electricity, petrol and food.
An industry report suggests that the private label product offering has grown aggressively, with some retailers having extended the concept to identify with a store. It says private label sales comprise around 17.6 percent of retailers’ revenue, and could increase to 25 percent over the next three years. This is despite the fact that South Africa is still lagging behind international trends.
These figures also suggest that when consumers are given more choice they buy wisely. Other industry data show that when times are hard, consumers switch to private labels. This decision comes second after cutting out takeaway meals.
The best five selling private labels items include chicken, long-life milk, cooking oil, fresh milk and yoghurt. Rice and other items such as biscuits and dog food appear last on the list. This might suggest that items such as rice are dominated by strong brands, which consumers might be willing to spend on.
Spar, which has increased its private labels offering over the years, said despite the growth of private labels, consumers remained brand conscious. This means that there is still room for growth for both national and private brands.
The report also says that for some time private labels have been seen as lower price, poor quality products, however, this perception has changed over time.
Edited by Peter DeIonno. With contributions from Asha Speckman and Nompumelelo Magwaza.