Spreading Wings

Dimension Data, an IT infrastructure services provider and network
integration player has offered to buy the remaining 44.9% of the
Singapore-listed shares of its Asian subsidiary, Datacraft for $1.33 per share
in July this year, translating into a total purchase consideration of
approximately $276 mn. In 1997, Dimension Data first acquired a controlling
stake in Datacraft, which has been operating under a separate brand, though its
strategy, operations, and solutions and services offerings have been closely
aligned with that of Dimension Data.

The acquisition has been prompted by several strategic reasons. Datacraft has
been a key partner of Dimension Data in its business for eleven years now ever
since the latter acquired controlling stakes of the former in 1997. Datacraft's
regional performance has been strong all along. In its Q2, FY '08 results,
Datacraft reported revenue growth of 25.5% y-o-y and profit increase of 24.9%
(after tax) to $9.51 mn on orders from India and Indonesia.

In India, Datacraft registered an impressive growth of 42.2 %, clocking Rs
960 crore in FY '08 from Rs 675 crore in FY '07, in its network integration
business. So, Dimension Data wants to extend its relationship to the next level
by acquiring Datacraft.

In terms of technology trends, India is migrating toward convergence of
voice, data, video, and security. Apart from this, increased efforts to
strengthen broadband penetration and government's initiatives on ending the
digital divide, among other things, are indicating the availability of increased
business opportunities for network integration players. So, Dimension Data wants
to have a bigger share of the business revenue in the network integration
segment, apart from IT infrastructure service businesses in India.

Commenting on the offer, Brett Dawson, CEO, Dimension Data says, "We are
excited about the opportunity to acquire the remaining shares of Datacraft,
taking into consideration the growth prospects in Asia and the competitive
landscape in our industry. Integrating Datacraft as a wholly-owned subsidiary
will provide greater flexibility and place us in a better position to capture
market opportunities."

Keeping the brand name, management team, and business strategies of Datacraft
intact, this acquisition will also facilitate Dimension Data in offering quality
services with great consistency for multinational operations. Dawson says, "We
know Datacraft is a solid company with an excellent management team and
committed and highly skilled employee base. They have a strong position in key
markets in Asia. With a footprint spanning thirteen countries, market leadership
positioning and long-term vendor partnerships, the acquisition of Datacraft is a
logical step for us."

Bill Padfield, CEO Datacraft adds, "Dimension Data has been involved with
Datacraft for a long time and has been a supportive shareholder." Since there is
a strong alignment already between the duo, only very few changes in Datacraft's
operations are expected.

Kannan K

kannan@cybermedia.co.in