Regulator finds that control by target firm’s management averts any great reduction in competition.
The Competition Commission has approved the management buyout of Dimension Data’s (Didata) advanced infrastructure business.
This is the second such deal for the technology giant in the past month after a similar transaction involving an affiliate in Ghana.
On Monday, the competition body — which investigates the fairness of markets in SA as well as approves mergers & acquisitions — said it gave the nod for the proposed transaction for African Business Expansion and Consulting (ABEC) to acquire Dimension Data Advanced Infrastructure, with conditions.
The commission described ABEC as being “controlled by management of the target firm”, meaning the DiData unit is being bought out by a collective made up of its management team.
“The commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,”
the body said in a statement.
The business unit specialises in the manufacturing of communications and related equipment. Business Day understands that the business is being let go because it seen as noncore.
In late 2023, the group sold MWeb — one of the country’s largest internet service providers (ISPs) — to WebAfrica, as part of the slimming down exercise.
As part of the transaction, an employee share ownership plan will be created “for qualifying workers”, and implement a historically disadvantaged person (HDP) ownership transaction.
“In addition, the merging parties will continue with the current enterprise and supplier development initiatives to support HDP operators and SMMEs [small, medium-sized and micro-enterprises].”
Earlier in January, Ghana’s DiData was sold, also in a management buyout by Yvette Adounvo Atekpe, the company’s CEO for the past 16 years. The deal will see the company trade under a new name from April.
This comes as Didata’s parent, Japan’s Nippon Telegraph & Telephone (NTT) gears up to rebrand the existing Dimension Data to NTT in the region from April 1. Business Day reported in May 2021 that NTT would double down on its investment in the Johannesburg-based IT company.
Three years ago, DiData went through a big rebranding exercise, retiring brands Britehouse, Internet Solutions and ContinuitySA in a move that resulted in the group operating under one name and reducing duplication between some of its subsidiaries.
Co-founded in 1983 by businessman Jeremy Ord, Didata accounts for about a fifth of NTT’s revenues to the equivalent of R1.5-trillion. It employs more than 10,000 people in 15 countries across the region. SA accounts for 70% of the business.
After surviving the dot.com bubble two decades ago, Didata grew into a business selling everything from networking equipment to IT security. It attracted a $3.2bn takeover offer from Japan’s NTT in 2010. It was once one of the largest technology companies on the JSE, with a market cap of R77bn at its peak in September 2000.
But the company has had a turbulent few years, including a messy legal battle with former chair Andile Ngcaba and instability at executive level.
A year ago, Didata laid criminal complaints against former executives, saying they broke the law when they oversaw the sale of the company’s sprawling head office. According to deed’s office data, the property, The Campus in Bryanston, was sold for R1.3bn in October 2019.
A year earlier an anonymous letter alleged that an independent investigation of the transaction, which was meant to boost the company’s BEE credentials, found evidence that some executives were implicated in unethical and illegal activity to line their pockets through the property sale.
Source: Business Day
