Alviva acquires technology distributor Tarsus for R185 million

Listed ICT and communication technology products and services provider, Alviva has on Thursday, 12 November 2020, entered into an agreement with Mamzen to purchase technology distributor, Tarsus, for R185.4 million.

Upon implementation of the acquisition, Tarsus will become a subsidiary of Alviva.

Established in 1985, Tarsus is a partner in handling and distributing some of the world’s most prominent IT brands to the Southern African reseller channel. Tarsus has expanded into multiple regions across sub-Saharan Africa.

The group offers its customers branded products within the wider technology distribution ecosystem, supported by professional solutions in supply chain optimisation, cloud, and security.

The Tarsus Group has two main operating subsidiaries: Tarsus Distribution, the company that owns the South African, Botswana and Namibian IT distribution operations, and Tarsus on Demand, a company which operates a cloud solutions business.

Excluded from the transaction is the GAAP Point-of-Sale software business, which will be distributed, prior to Alviva’s acquisition, to the current shareholders.

The audited profit after tax attributable to the net assets of Tarsus that is the subject of the acquisition for the year ended February 2020 was R34.8 million, Alviva said.

It said that the acquisition of Tarsus is pursued primarily for the following reasons:

• Expansion of the current IT distribution businesses into the retail customer segment where Alviva has limited exposure;
• Expansion of the product baskets by adding new vendors;
• Further expansion into Africa. Tarsus’ African business exceeds R670 million in revenue; and
• Growth in the cloud solutions business. Tarsus’ cloud business is significantly larger than that of Alviva.

In September, Alviva reported a 50% drop in headline earnings for the year ended June 2020, calling its results “disappointing”, but noting that it managed to navigate the challenges presented by the economic fallout of the Covid-19 pandemic and national lockdown, as well as load shedding during the period.

“Although the financial results are disappointing when compared to those in prior periods, a great deal has been achieved despite the enormous challenges,” the company said.

Salient features:

• Revenue dropped by 7% to R14.8 billion;
• Earnings before interest, tax and amortization (EBITA) decreased by 18% to R708 million;
• Headline earnings per share were down 50% to 149.4 cents;
• Earnings per share plummeted by 59% to 112.7 cents;
• The group declared a dividend of 15 cents per ordinary share, down 50% from the prior year.

Read: Alviva bets on new businesses in challenging economy