Datatec, the parent company of WestconGroup and Logicalis, has confirmed that it is in the process of negotiating “a material transaction” and the rumour is that its $4.9 billion distributor is going to be flogged off.
Datatec has told the regulators that the “material transaction” could have a material effect on the $6.5 billion company’s stock price if it is successfully completed.
Westcon-Comstor has not been doing that well over recent quarters. Westcon’s revenue fell 10 percent in the most recent filing period to $2.26 billion, with sales dropping everywhere except Asia-Pacific. The rumour is that it makes sense to off-load it, however no one is confirming anything. .
One of the reasons for the company’s woes is that its Latin America was sucking it dry and it was costing a fortune to transform the company’s business process outsourcing (BPO) practice.
Datatec spent $160 million in June 1998 to buy a 92.5 percent stake in WestconGroup and quickly expanded into Europe, which now accounts for 34 percent of the distributor’s overall sales.