Reunert increases its stake in Siemens SA
Tuesday, 27 November 2001
BY BRONWEN KAUSCH, ITWEB JOURNALIST
[Johannesburg, 27 November 2001] - Reunert today announced it has increased its share in Siemens Telecommunications (Sietel) from 27.5% to 49%. Reunert will purchase the 21.5% Marconi shareholding for a cash consideration of R279.5 million in a deal which values Sietel at R1.3 billion. The acquisition is effective immediately.
As part of the agreement, international parent company Siemens, which currently holds a 51% equity stake in the local subsidiary, has been granted a call on 9% of the 49% shareholding for a 180-day period.
News of the deal comes five days after Reunert announced it was acquiring an additional 37.2% in Nashua Nedtel Cellular from Nedcor, giving it 95% holding in the cellular service provider.
The Nashua Cellular deal was worth R224 million and together with the Siemens deal, Reunert has taken a substantial dip into the R580 million cash reserves reported in its results for the year to September.
Reunert commercial director Gerrit Oosthuizen says the company won't borrow money to pay for either acquisition, but will not look at further acquisitions in the short-term that will require alternate financing.
"It is a close call on the cash, but we have sometimes come under criticism for not having enough debt. Reunert is a very cash generative company and this will not put a strain on the business," says Oosthuizen.
"Its [Siemens] order book is at a high level after being awarded the Cell C contract to supply the entire network infrastructure for the third cellular operator as well as Eskom Easitel's fibre optic backbone," says Reunert CEO Gerrit Pretorius.
Easitel is a contender for the second fixed-line telecommunications network operator and Pretorius says the deal will enhance Reunert's earnings for financial year 2002.
"Much of Sietel's business is based on a huge installed base, providing a high level of annuity income that underpins earnings," says Pretorius.
According to Reunert, the Cell C contract was valued at $221 million and the Eskom deal at R400 million.