Huge Group offers to buy Adapt IT for US$55 mn

 Huge Group offers to buy Adapt IT for US$55 mn

South Africa’s Huge Group Ltd, which was created via consolidation between telecom companies TelePassport (Proprietary) Ltd and Centracell (Proprietary) Ltd in 2007, has struck another deal.

The telecom company has made an offer to acquire Adapt IT Holdings Ltd as it continues to evolve into a diversified investment holdings group.

The company has proposed a swap ratio of 0.9 Huge Group shares for each Adapt IT share tendered. If Adapt IT’s all shareholders accept the offer the total purchase consideration would be ZAR799.8 million, or US$55 million.

This would result in issue of 130.4 million shares, representing 80.12% of Huge shares currently in issue (excluding treasury shares).

Huge Group comprises telecommunications service providers Huge Connect Proprietary Ltd, Huge Networks Proprietary Ltd and Huge Telecom Proprietary Ltd. Adapt IT provides specialist proprietary software and value-added services such as data analytics to the telecom industry via mobile networks.

Huge Group companies provide services using mobile networks and so the deal will bring vertical consolidation synergies.

Huge Connect provides payment connectivity solutions to retail merchants and, in particular, merchants operating in the hospitality industry. Huge Software Proprietary Ltd licences accounting software.

Adapt IT’s hospitality division, created through the acquisition of Micros South Africa, specialises in the resale, support, and deployment of software and hardware products including cloud solutions. Its financial services division provides software solutions to audit and accounting firms, government entities, municipalities and large companies.

Huge Group said that, if it gains control of Adapt IT, the target company’s shareholders will have an opportunity to lower their financial risk exposure. This is because the market value of Huge’s equity over its interest-bearing liabilities provides more cover when compared to the market value of Adapt IT’s equity and its liabilities.

“The proposed transaction also presents an opportunity to create a larger entity with greater critical mass and enhanced liquidity, providing an improved platform to facilitate acquisitive growth,” Huge Group added.

Adapt IT serves over 10,000 global customers. Its headquarters are in Johannesburg, and it has regional offices in Durban and Cape Town. The company also has a presence in Mauritius, Botswana, Kenya, Nigeria, Australia, New Zealand, Singapore and Ireland.

The net asset value of Adapt IT at the end of June 2020 was ZAR746.5 million. The profit attributable to equity holders of the parent for the year ended June 30, 2020 was ZAR70.6 million.

Huge Group is also eyeing a secondary listing on the London Stock Exchange’s junior market AIM.

Vivek Sinha

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