An agreement has been announced for the purchase of a portion of IST Group for R505 million by Powertech, a wholly-owned Altron subsidiary.
The five IST divisions that will be acquired are Energy, Otokon, Data, Telecom and Industrial. This deal excludes IST's defence and nuclear divisions, and is subject to certain conditions including approval by the competition authorities.
IST was formerly listed on the JSE, and is now privately owned by management and Ethos Private Equity. Management has committed in terms of this transaction to re-invest a portion of their proceeds received from Powertech in Altron's participating preference shares and key executives have committed to three year service agreements. The transaction is expected to be earnings enhancing at both Altron and Powertech levels.
Based in Pretoria, IST was founded in 1980 as Integrators of Systems Technology, and is a technology and solutions driven business that offers engineering solutions to its customers in the power utilities, telecoms, mining and materials processing industries. The five divisions being acquired have a combined turnover of around R500 million per annum and employ some 300 people, most of whom are engineers. Some of the engineering applications and solutions offered to its markets are turnkey substation development, energy management, infrastructural operational support systems, telecoms access network solutions and turnkey project management.
According to Harry Coetzee, chief executive officer of IST: "My team and I are looking forward to becoming a part of Powertech. Most importantly, Powertech's BEE credentials will significantly enhance the outlook for IST. Furthermore, we expect Powertech to expand IST's opportunities in the market and will allow us to benefit from the economies of scale of being part of a bigger group." Coetzee will join the Powertech Executive Committee as well as the Powertech board of directors.
The acquisition of IST will expand Powertech's base of key principals, alliance partners and customers through its long-standing association with major South African corporations including, amongst others, Eskom, Telkom, Highveld Steel, Sasol, Vodacom, the mining industry and municipalities. Key principals of IST include multinationals such as General Electric, Tellabs, Amdocs, Plug Power and others.
Powertech will continue to manage the IST business as an autonomous operation alongside its four existing divisions, namely Cables, Transformers, Batteries and Industrial. Norbert Claussen, chief executive officer of Powertech, said "Bringing IST into the Powertech group is in line with our strategy to create a significant service business to complement our existing marketing and manufacturing businesses. The acquisition of IST enables us to offer a complete package to our customers in our chosen markets. This is of particular importance in the current buoyant infrastructure, building and construction sectors. The acquisition furthermore enhances Powertech's human capital capacity and skills base."
Robert Venter, chief executive of Altron, commented: "This acquisition furthers our stated strategy for increasing our exposure to the growing South African infrastructure markets in those segments aligned to our core Powertech business and I welcome IST and its employees into the Altron fold."
For more information contact Regula Niehus, Powertech, +27 (0)11 706 7184, www.powertech.co.za
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