EOH has concluded a transaction that sees its wholly owned subsidiary EOH Mthombo enter into a share purchase agreement with RIB Limited, a subsidiary of German listed RIB Software, wherebu EOH will dispose of 70% of the issued ordinary share capital of Construction Computer Software (CCS) for R444 390 000.
The deal was struck at 8,5-times EBITDA and the companies have entered into a reciprocal put/call option, in terms of a shareholder’s agreement, for the disposal of the remaining 30% of the issued share capital of CCS at the same multiple applied to 31 December 2022 adjusted EBITDA.
Ninety percent of the purchase consideration is payable in cash on closing, following fulfilment or waiving of all conditions precedent. The remaining 10% will be held back by RIB as security for any shortfall in warranted financial results or claims against EOH Mthombo. The balance due will be payable to EOH Mthombo in cash by no later than 31 July 2021.
CCS is a key provider of enterprise software solutions for the construction and engineering industries.
RIB leads the digitisation of the construction industry with its software technology combined with a market leading cloud platform approach to software services. RIB is operational in almost 30 countries, has more than half a million licensees and is focused on growing that number to two million over the next two years.
CCS’ access to RIB’s broad development network, international business analysts and development teams, will enhance CCS’ growth strategy.
Through EOH’s remaining 30% holding of CCS, EOH will participate in the company’s growth trajectory. In addition, the put/call arrangement provides an effective exit for EOH after December 2022. Potential also exists to grow the RIB relationship to a broader partnership with EOH ICT in cloud and development services.
EOH management, at the interim results period, stated that it would unlock R1-billion in cash through strategic partnerships and targeted disposals in order to reduce the group’s debt. The proceeds of this transaction will go a long way to creating a more appropriate capital structure and will be applied mainly to a reduction of the EOH’s debt and to a lesser extent, for working capital requirements.