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Competition commission gives Jasco/Spescom deal the ‘green light’

30 August 2012
15 December 2010
Jasco Electronics Holdings’ proposed acquisition of Spescom Limited, first announced on 3 September, 2010, has been approved by the Competitions Commission, allowing both organisations to commence with the transaction and finalise the acquisition. 

The proposed transaction will be settled through the issue of 32,9 million ordinary shares, made up of one Jasco ordinary share for every 2.47 Spescom ordinary shares. In addition, a cash consideration of R11,8 million, which represents 15 cents per Spescom share, will be paid.

The acquisition formed part of Jasco’s strategy, led by CEO Martin Lotz, to grow the company’s balance sheet and revenue whilst achieving significant cost savings with the consolidation of management, compliance and head office costs.

The merger will provide both organisations with significant benefits. Says Martin Lotz, CEO at Jasco: “The acquisition will allow us to enhance our earnings and, given Spescom’s expertise in the Information Communication Technology (ICT) sector and Jasco’s experience in the telecommunications arena, will provide us with an opportunity to expand our focus in the convergence space. These two product offerings are complementary and will allow us to provide a more comprehensive and synergistic offering to a wider customer base.”

Jasco’s hi-site network, a wireless communication network that delivers connectivity through strategically placed communication towers on high sites such as buildings and mountain ridges together with Spescom’s NewTelco South Africa, a joint venture with NewTelco GmbH that provides carrier-neutral co-location services, will create additional opportunities for Jasco’s existing customer base. Furthermore, Spescom’s new office in Uganda that services East Africa will expand Jasco’s established footprint in West Africa, extending the overall footprint and reach of the organisation.

Jene Palmer, CEO of Spescom Limited, set new strategic goals for Spescom three years ago which saw the company improve its profitability, cash on hand and gearing ratio significantly, with the Jasco deal delivering on Spescom’s stated goal of increasing turnover to R1 billion

Says Palmer: “Our strategy was designed to unlock shareholder value and a merger was required for us to fully realise this goal. The company has expanded and grown over the last three decades from developing world firsts in the electronics market to becoming a business communications specialist with a focus on voice, video and data. Anticipating market requirements and embracing change has allowed us to become a successful ICT organisation and this deal will provide us with even more value adds and opportunities to fast track our growth and success.

Says Lotz: “We are very excited about this transaction and especially pleased with the fact that the two groups have no major cultural differences. This will make the process of integrating the two businesses a smoother one. We have a similar structure with a central head office and autonomous divisions, and no conflicting businesses. Putting the two head offices together, as well as only having one listed vehicle will already save in excess of R7 million per year. This is set to improve margins in the merged entity. Furthermore, Spescom’s strong cash generation will improve Jasco’s gearing. Importantly, Jasco will remain black-owned after the transaction.”

Background on groups

Jasco has four divisions:
• The Telecommunications division focuses on the provision of products, services and solutions to the access and transmission network of both fixed-line and wireless telecommunications operators. These solutions are supplied through a combination of in-house manufactured products and design and install services, complemented by strategically sourced products on an exclusive basis from leading overseas suppliers.
• The Domestic Products division focuses on the domestic appliances, automotive and leisure industries. The division cuts wire, moulds plastic, presses steel and assembles these into components and harnesses for use by domestic product manufacturers. The division recently acquired the well-known Snapper brand with an extensive range of plugs, adaptors and cable sets.
• The Security division provides full turnkey solutions in electronic security systems through the design, supply, installations and maintenance of solutions including CCTV, access control, fire and perimeter protection.
• The Electrical division includes Jasco’s share in M-Tec, a major cable manufacturer. M-TEC supplies products to the Power and Telecommunication markets. Products include aluminium overhead conductors, aluminium and copper power cables and fibre optic and copper telecommunication cables. The recently acquired subsidiary, LeBLANC Lighting Structures, manufactures and installs steel towers for the electrical and telecommunications sector.

Spescom has five divisions:

• Spescom DataFusion is a business communication and customer interaction solutions specialist. It provides world-class contact centre and enterprise telephony solutions to medium and large organisations that manage high volumes of internal and customer interactions
• Spescom DataVoice researches and develops proprietary workforce optimisation solutions as well as risk mitigation technologies which record, manage, re-create and analyse voice and screen transactions
• Spescom Telecommunications is a systems integrator for fixed and mobile telecommunications network operators, utilities, transportation and government communications backbones, as well as for carrier of carrier network operators’ transmission and access networks
• Spescom Media IT provides solutions, services and enabling technologies and equipment that progresses the broadcast industry from image capturing through to transmission
• NewTelco South Africa is a recently created carrier neutral co-location services provider that provides a telecommunications inter-connection hub for national, regional and international carriers. This is a joint venture with NewTelco GmbH, a German company that is a leader in this arena with more than five neutral carrier co-location hubs in cities such as Frankfurt, London, New York, Kiev and Vienna. Through its points of presence (POP’s) in other major centres  in Europe and Asia, it provides a carrier market place for more than 1000 carriers