The R54 million (US$8.7 million) deal is a significant milestone in Faritec's growth, and is in line with its strategy to diversify and expand its solutions portfolio.
The integration of the two companies, expected to be completed in June, will almost double Faritec's size and create one of the largest black-empowered technology solutions providers on the JSE.
Earnings per share are estimated at 7.4c and annual revenue at above R750 million to 30 June 2005. The combined entity will have a skilled staff complement of more than 400.
Enterprise Connection -- formerly the corporate arm of the retail-focused Connection Group -- is a company with R300 million turnover that specializes in technology solutions and services for SMEs and the public sector.
It also has solid partnerships with HP for infrastructure, Microsoft, Citrix and Symantec for software, and Hansen and AXSone for other technology offerings. "The rationale for the deal was simple," explains Simon Tomlinson, the CEO of Faritec.
"We have traditionally focused on IBM infrastructure, business integration, service delivery competency and the provision of enterprise-level managed security.
"We remain committed to these areas of business while expanding our technology portfolio through this acquisition ... adding a host of strategic technology partnerships to our existing agreements with IBM, SAP, Microsoft and Symantec."
Paul Moses, the CEO of Enterprise Connection, believes that the deal will have far-reaching benefits for existing customers and staff.
"For Enterprise Connection the deal was about a strategic fit -- it allows us to compete effectively in the larger contracts and tenders.
"We will also be able to improve our focus in the high-end solutions and services markets which would have required a significant investment in technology, systems and people," he says.
"Faritec has already made this investment and we can leverage off it to add value to our customers. We have found very little overlap between the two companies' customer bases and this also provides and opportunity for the group."
Additional benefits of the deal include: national expansion; initial economies of scale; Enterprise Connection's rental finance option and Faritec's services skills that can be offered to each company's customers; the fact that the integrated company will be in a stronger position when bidding for larger tenders; and an increased BEE shareholding through Enterprise Connection's relationship with Canal Square.