Alviva Holdings, through its subsidiary DCT Holdings, has entered into a sale of shares agreement to acquire 70% of the issued share capital of SynergERP (Synerg SA).
Through its subsidiary Alviva International Investments, it has also entered into sale of shares agreements to acquire 51% of the issued share capital of Synergy DWC-LLC (Synerg UK and Synerg UAE).
The acquisition of Synerg SA will be effective from 1 July 2019 and the acquisitions of Synerg UAE and Synerg UK will be effective from the closing date, which will be the first day of the month following the month in which the last of the conditions precedent to the acquisitions or met or waived.
The Synerg Group mainly consists of five trading companies, namely Synerg SA, including subsidiaries, SynergIT and Synerg300. In addition, it has two newly established regional operations, one in the UK, Synerg UK, and one in the United Arab Emirates, Synerg UAE.
The Synerg Group enables businesses to leverage software in order to achieve operational efficiency in all areas of a business, from operations to human capital.
The business was established in 1993 and has been a Sage Reseller for over 25 years. The Synerg Group has earned Platinum reseller status and has been recognised as a top performing partner for three consecutive years – 2016, 2017 & 2018.
The business is currently dedicated to the Enterprise Management Software suite (also known as Sage X3 and Sage X3 People) and supports global organisations through its offices in South Africa, the UK and Middle East. The business is invested in the Sage Enterprise product stack and has one of the largest complement of certified consultants in Africa.
As a business, it is closely aligned with Sage and Sage’s strategic growth areas, enabling it to stay up to date with the latest initiatives and focus areas.
Alviva has increased its business exposure in the IT services and solutions space, a focus area of its acquisition strategy, and the Synerg Group will be an additional investment in this lucrative sector of the IT industry.
The Synerg SA transaction comprises:
* The purchase price of R90,1-million (subject to adjustment) for a 70% shareholding in Synerg SA, is payable in cash in two instalments.
* Payment one is for R63.,1-million, representing 70% of the total price payable. This payment is payable on the Closing Date of the transaction, expected to be around 1 July 2019.
* Payment two is for R27-million, subject to a price adjustment formula linked to the actual profits achieved by Synerg SA in respect of the financial year ending 31 December 2019. This payment will be made on the completion of the 2019 audited accounts.
* The maximum purchase price payable by DCT in respect of the 70% acquisition of Synerg SA is R108 million.
* On the Effective Date, the Vendors warrant a minimum net asset value of Synerg SA of R11,5-million.
In summary, the Synerg UK and Synerg UAE transactions comprise:
* The purchase prices payable by Alviva International in respect of the acquisition of Synerg UK and Synerg UAE will only be calculated and paid following the completion of the audited accounts of Synerg UK and Synerg UAE for the year ending 30 June 2022 (payment must be made on or before 30 September 2022).
* The purchase prices will be based on a PE of 9.1 in respect of the actual profits achieved by Synerg UK and Synerg UAE respectively, for the financial year ending 30 June 2022.
* The maximum purchase price payable by Alviva International in respect of the acquisition of Synerg UK is £2,7-million (R 51,7-million) and Synerg UAE is AED12,8-million (R 52,3-million).
Alviva International also has an option to acquire a further 19% of each of Synerg UK and Synerg UAE on the same pricing formula.