The completion of the sale by Datatec of its Westcon-Comstor business in North America and Latin America and of 10% of the remaining part of Westcon to Synnex could see a major windfall for shareholders.
In a statement, the company says the proceeds of the transaction comprise $630-million in cash on completion and up to $200-million payable as a cash earn-out, subject to Westcon Americas meeting certain agreed gross profit performance targets.
The maximum consideration of $830-million equates to an equity valuation of the total Westcon-Comstor division of $1,1-billion.
It adds that its board will be reviewing options for the use and distribution of the cash proceeds received on closing of the transaction.
As previously communicated to shareholders, the statement says, the board intends to retain $130-million for various operational and working capital and expansion funding requirements. The board will consider returning the majority of the remaining $500-million to shareholders by way of share repurchases and / or a specific dividend, but in the meantime the proceeds will be retained in US dollars.
The Board has previously communicated that any cash payments received on the earn-out will be returned to shareholders.
Jens Montanana, Datatec CEO, said:
“This transaction crystallises excellent value for our shareholders – we will revert to shareholders with our plans for the use and distribution of the cash in due course,” says Jens Montanana, CEO of Datatec. “The strategic partnership between Westcon International and Synnex will provide significant growth opportunities for both businesses, while working together to serve vendors and customers globally.”