Datatec Buys LAN Systems in $30M Deal

SYDNEY (04/20/2000) - South African IT giant Datatec has acquired networking distributor LAN Systems for over A$30 million (US$17.7 million) in a move that instantly catapults the company onto the global stage.

LAN Systems completed the deal late yesterday which will see it instantly fold into Datatec's distribution arm, the Westcon Group, and become known as Comstore, the name of Westcon's global value-added distribution business.

The networking distributor company will begin the transition to the new moniker immediately, despite conceding it will be painful to let go of the significant brand equity it has built up.

The deal is set to cause a stir over at rival networking distributor Express Data, with Datatec already firing a warning shot across its bow.

Datatec's Australasian chief operating officer, Bruce Harvey, told ARN late yesterday the move positions Comstore as a "serious distribution player" in the region. It's aim is to become the number-one networking distributor within a year, he explained.

Harvey said that ultimately Express Data still belongs to Dimension Data, a company that recognises its core competency is not in distribution. While stating that Express Data itself is a "good company", he noted Australia is the only region in which Dimension Data still maintains a distribution operation.

"Long term, the writing's definitely on the wall," he said. "I believe in five years or less Dimension Data will have hived off Express Data."

Harvey said Datatec purchased LAN Systems for more than A$30 million.

LAN Systems' chief operating officer, Nick Verykios, has retained his position in the company, joining three other senior executives to head up the Australian and New Zealand operations of Comstore. Andrew Blunden will become CFO, John Walters will be COO, while Ms Terry Kelso is national sales manager.

In an exclusive interview with ARN, Verykios explained LAN Systems has been considering its options for around a year, and at the time considered an IPO.

While rumours circulated about potential buyouts, LAN Systems set about building its services arm, Asia Pacific business, then later in Europe and the US.

"In order for us to continue to do what we do, we needed to be global," Verykios explained. "This opportunity came up and allowed us to fast-track those (plans)."

Verykios is also upbeat about Comstore's ability to compete in the local market now that the LAN Systems crew has joined a global company. "All I can say to (our competitors) is look out, we're bigger than you now."

For the full story, read ARN's exclusive report next week in the April 26 issue.

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