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South Africans swoop on European reseller scene

USKO buys Bytes Technology Group

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Analysis It helps when your business is not for sale. It helps, too, when your prospective buyer is one of the South Africans who seem to be paying top dollar for European channel companies. Latest on the scene is USKO, a Johannesburg Stock Exchange-listed company that has marked its arrival in the UK with the £15.5 million acquisition of Bytes Technology Group, the Epsom-based corporate reseller founded by chairman Shaun Frohlich (PC Dealer, 21 October). Compare and contrast with the £10 million that Info'Products paid two years ago for Simmons Magee, the former billet of BTG managing director Simon Ogden and marketing director Tim Hall, and a company more than twice the size of BTG. True, Info'Products has - with the outstanding exception of what became SHL Learning Technologies and was put out of its misery earlier this year by Action Computer Supplies - been labelled as the worst acquisition record of any UK reseller. True, USKO is putting comparatively little money up-front BTG's way (most of it is released after three-year lock in), but that's an awful lot of jam tomorrow for the management team at BTG. And true, BTG has a much bigger services element than Simmons Magee had. By nailing its colours firmly to the Microsoft/Compaq mast, it has prospered. It accounts for about 25 per cent of all Microsoft Select licence sales (by accounts -- not by volume) in the UK and is already making money in thin client technology and storage management. But how does an ambitious £20 million-plus company like BTG make it into the premier league of resellers? The answer is that it can't - not on its own, at any rate. 'We weren't going to get niche and we weren't going to get out, so that leaves getting big,' says Hall, who adds that the acquisition has accelerated the company's business plan by three years. Under the wing of USKO, BTG will carry on much the same as before, except it will have a member of the parent company sitting on the board as a non-exec. Up for discussion is whether it forms USKO's beach-head into Europe or whether USKO opts for a more devolved holding company style. USKO appears to have plenty of money sloshing around for acquisitions. Founded in 1911, it has its roots in manufacturing. But in the last 12 months, it has built an IT division throught the acquisition of 'top South African IT companies and IT solution providers'. Its stated aim is to increase overseas earnings to 60 per cent of turnover by 2003. It wants, in other words, to get as many assets out of South Africa as possible. UKSO's fellow South African channel conglomerates, Datatec and Persetel Q Data Holdings, are equally keen to build multinational arms. A combination of high share ratings, a failing home economy, an uncertain political scene and plain ambition are the drivers. This should translate into many more reseller acquisitions in Europe. ®

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