CAPE TOWN – AYO Technology, the country’s largest black empowerment information technology company, yesterday announced that it had acquired a 55 percent stake in Sizwe Africa Group for R165 million.
Ayo said the purchase price would be based on an entity value of R300m, based on a R70m earnings before interest, tax, depreciation and amortisation (Ebitda)
Ayo chairperson Dr Wallace Mgoqi said the group would pay 90percent of the purchase price up front with the balance settled on anticipated profits in a 3- to 5-year period. Mgoqi said the transaction would be subject to various conditions that would include the conclusion of definite agreements.
He said the purchase was in line with Ayo’s growth strategy to grow its underlying assets and operations.
“The deal will also create scale within the Ayo platforms, thereby broadening its customer base and presence,” Mgoqi said. “The transaction will also add long-term synergy and value in the businesses that we invest in.”
Ayo has embarked on a massive expansion strategy, which saw it signing a multi-year information technology contract with energy giant Sasol. The deal, which is believed to be valued at more than R2billion, would see Ayo providing and managing Sasol’s entire global technology network, communications and security services.
Sizwe is one of South Africa’s leading integrated ICT solution providers. Its services include a focused spectrum on infrastructure, metro and long-distance optic fibre storage server processing and data centres. Its clients include, among others, various government departments and blue chip companies such as Vodacom, Neotel, Cell-C, Exxaro and Barloworld.
During the year to end June, Sizwe reported more than R1bn in revenues, strong cash generated from operations and strong Ebitda.
Chief executive Hanno van Dyk said the Ayo purchase was a ground-breaking BEE transaction in the ICT sector. Van Dyk said the transaction would propel Sizwe to new heights.
“Sizwe’s commitment to its transformation strategy is echoed by the transaction with Ayo,” Van Dyk said. “After 5 years of remarkable organic growth, Sizwe is now focused on the next level of development with our product, services and synergy with Ayo.”
Mgoqi said the Sizwe purchase would exclude anticipated exponential capital appreciation and boost Ayo revenue, service and product offering significantly, while allowing it to capture further market share and overall presence.
“This acquisition serves as further evidence of Ayo’s resolve to implement the objectives of its strategic roadmap,” he said.
“The investment into Sizwe is set to more than double Ayo’s revenue and significantly contribute to growing its bottom line.”
Ayo shares closed unchanged at R29.75 on the JSE yesterday.