Durban - Shares in Datatec climbed to their highest in a year, gaining more than 18 percent after the company said it was considering selling a major share of its Westcon-Comstor operations for a total consideration of more than $800 million (R11 billion).
The information and communications technology company saw its share price reaching R63 a share in early morning trade.
The shares closed 7.14 percent up at R57, valuing the company at R12.08 billion.
Datatec, however, warned its shareholders that it could not guarantee that the Westcon-Comstor transaction would be concluded successfully as it was subject to contract and exclusivity provisions.
Datatec is an international ICT solutions and services group operating in more than 60 countries across North America, Latin America, Europe, Africa, the Middle East and Asia-Pacific.
The group’s service offering spans the technology, integration and consulting sectors of the ICT market.
“There can be no certainty that the transaction will be completed. Shareholders are therefore advised to continue to exercise caution when dealing in the company’s securities,” the group said.
Datatec said it would announce further details of the potential transaction as soon as practicable.
The company also released a trading update for the year to end February, informing its shareholders about the expected earnings.
It said it expected underlying earnings per share to be more than 50 percent lower or at least US16 cents (R2.20) per share lower than in 2016.
The company reported 32c per share in 2016.
Read also: Datatec mulls Westcon-Comstor stake sale
It said it also anticipated that its headline earnings per share (Heps) and earnings per share (Eps) to be more than 50 percent lower (or at least 10c lower) than the year before.
The group achieved 19.4c a share and 19.3c a share, respectively a year ago.
The company reports its results in US dollars. It attributed the expected decline to Westcon-Comstor.
“The year expected decline in earnings is as a result of a worse than expected result in Westcon-Comstor.
"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.
"Westcon-Comstor has made adjustments to the operating model and Datatec expects this to support a rapid recovery,” the group said.
In its half-year results in October, Datatec reported a 7.6 percent decline in revenue.