Datatec Shares Soar by a Record After $830 Million Asset Sale

(Bloomberg) -- Datatec Ltd. shares jumped by the most on record after the South African IT services company agreed to sell the North and Latin American operations of its Westcon-Comstor business for as much as $800 million.

Synnex Corp. of the U.S. will take over the operations and buy a 10 percent stake in the rest of the Westcon-Comstor division for $30 million, Johannesburg-based Datatec said in a statement on Tuesday. The deal will be settled with $630 million up front, of which Synnex can pay as much as $500 million in stock, with an additional $200 million based on performance.

Datatec shares soared as much as 27 percent in Johannesburg, the most since at least 1995, and traded 17 percent higher at 60.01 rand as of 12:43 p.m. local time. That values the business at 12.7 billion rand ($987 billion). The stock is up 15 percent in London.

The deal erased a slump in Datatec shares that followed a May 11 warning that full-year earnings fell more than 50 percent due to a worse-than-expected performance at Westcon-Comstor, particularly in the three months through February. Sales at the division declined 7 percent over the year, with profit also down. On May 22, Datatec said it wouldn't pay a final dividend.

“Westcon-Comstor North America will benefit substantially from being part of a bigger business with a much larger addressable market, and so will our shareholders with our stake in Synnex,” Datatec Chief Executive Officer Jens Montanana said in the statement.

To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net.

To contact the editors responsible for this story: Gordon Bell at gbell16@bloomberg.net, John Bowker