Nippon Telegraph & Telephone Corp. agreed to buy South Africa’s Dimension Data PLC for £2.1 billion, or ¥286 billion, to expand in the faster-growing computer-services market, NTT said Thursday.
Japan’s largest phone company offered 120 pence a share, or 18 percent more than Johannesburg-based Dimension’s last closing price, the Tokyo-based phone carrier said. The management of Africa’s largest computer-services company and a majority of its shareholders have agreed to the sale, it said.
The friendly buyout is expected to be completed in October, enabling NTT to expand its global operations for corporate customers, the Japanese telecom giant said.
NTT will use funds on hand and loans from Bank of Tokyo-Mitsubishi UFJ to buy all outstanding common shares as well as those planned to be issued.
The purchase would give NTT a computer-services company with more than 6,000 customers across 49 countries as it seeks to reverse three years of declining sales.
“NTT needed to look for an acquisition target to make good use of its cash that’s piling up,” said Hironobu Sawake, an analyst at JPMorgan Chase & Co. in Tokyo. “As an overseas transaction that supplements NTT’s existing businesses, the transaction seems to be positive.”
The offer values Dimension at about 20 times earnings projected for the year ending in September, according to analyst estimates compiled by Bloomberg. That compares with an average multiple of 24 for 16 European software and computer-services companies tracked by Bloomberg.
Dimension in May reported net income rose 8.7 percent to $71.7 million in the six months through March as corporate customers boosted technology spending. Revenue rose 11 percent to $2.17 billion.
Worldwide information technology spending, which includes computer equipment and software purchases, will grow 9.3 percent this year from an estimated $1.4 trillion in 2009, according to Forrester Research Inc. in Cambridge, Mass.
“Global expansion is a crucial part of our growth strategy,” NTT President Satoshi Miura said in Tokyo. “Dimension Data has been expanding in Africa, South America and the Middle East, regions where our service offering has been lacking.”
NTT DoCoMo Inc., NTT’s mobile-phone subsidiary, in March 2009 bought a 26 percent stake in India’s Tata Teleservices Ltd. for ¥250 billion to take advantage of the market’s growth. The carrier in December bought 79.6 percent of Germany’s Net Nobile AG shares for an undisclosed amount.
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