Wrap Text
Refinancing of Westcon International and Minority Investment
Datatec Limited
Incorporated in the Republic of South Africa
Registration number: 1994/005004/06
ISIN: ZAE000017745
Share codes: JSE: DTC
OTCQX: DTTLF
("Datatec" or "the Group" or "Company")
REFINANCING OF WESTCON INTERNATIONAL AND MINORITY INVESTMENT
Introduction:
Datatec shareholders ("Shareholders") are advised that Datatec, the international Information and
Communications Technology (ICT) company, has, through its subsidiary Westcon International Limited
("WIL"), entered into binding agreements with Atlantic Park Strategic Capital II Designated Activity
Company and Atlantic Park Strategic Master Fund III, L.P. ("General Atlantic") for the refinancing of
Westcon International Group Holdings Limited ("WIGHL"), the intermediate holding company of the
Westcon group of companies ("Westcon"), as well as a minority investment in WIGHL (the
"Transaction"), with an intended closing date of 14 July 2026.
Westcon, operating as Westcon-Comstor group, is a global distributor and provider of communications,
networking, cyber security and cloud infrastructure and has been operating for over 40 years. Datatec
has owned the business since 1997. The business operates in over 50 countries across Europe, Asia-
Pacific, the Middle East and Africa. It also has a small presence in the USA.
Westcon has strong foundations in networking and cyber security and represents the market leading
technology providers in the sectors in which it operates. The business is experiencing significant growth
driven by multiple factors:
• AI enabled infrastructure investment
• Hyper-scaler growth driving more network access
• Edge-computing is expanding with smarter, faster end-user devices
• Threat landscape growing exponentially fuelling demand for more cyber security solutions
Westcon achieved its 7th successive year of top line gross invoiced income growth in its last financial
year with an EBITDA compound annual growth rate of 24% over this period. The business has
developed a suite of leading capability internal digital solutions which operate on a common global ERP
system. This highly evolved platform allows for both organic and inorganic rapid scaling.
For the financial year ended 28 February 2026, Westcon had net assets of US$127.7 million and Profit
after Tax of US$66.8 million.
The Transaction comprises:
i. The partial refinancing of the existing US$450m intercompany fixed return instrument/
shareholder loan advanced by WIL to WIGHL (the "Shareholder Loan") through a new 6-year
US$375 million senior secured debt facility provided by General Atlantic (the "New General
Atlantic Facility");
ii. a cash equity co-investment by General Atlantic of US$ 25 million to acquire 5.0% of the share
capital of WIGHL from existing shareholders (the "Equity Co-Investment").
iii. the issue of shares in WIGHL to General Atlantic, structured to replicate the economic effect of
4% penny warrants and 8% at-the-money warrants (further outlined below) (the "Warrant
Shares"); and
iv. the restructure of the WIGHL management incentive plan as further outlined below.
Financial Information:
As a consequence of the Transaction, the Shareholder Loan, together with accrued interest thereon,
will be repaid in full. The proceeds from the Shareholder Loan, together with the Proceeds from the
Equity Co-Investment will generate cash proceeds to Datatec of approximately US$434 million (ZAR
7.1 billion). The intention is to distribute these proceeds to Shareholders by way of a special dividend
(the "Special Dividend") in due course.
The Transaction values WIGHL at an equity valuation of US$ 950 million before the repayment of the
Shareholder Loan (funded by US$ 375 million from General Atlantic and US$ 75 million from Westcon's
existing financing facilities), and US$ 500 million after repayment of the Shareholder Loan.
WIGHL capital structure before the Transaction and on Day 1 after the Transaction:
Before the Day 1 after the
Transaction Transaction(2)
Shareholder Economic % Economic %
WIL(1) 95.0% 89.2%
Westcon Management 5.0% 2.1%
General Atlantic - 8.7%
Total 100.0% 100.0%
(1) Datatec Plc (which is a wholly-owned subsidiary of Datatec) owns 92.1% of WIL
(2) The Day 1 impact after the Transaction includes the Equity Co-Investment and dilution as result of the
penny warrants issued but excludes the impact of at-the-money warrants.
Rationale for the Transaction:
The Board believes the Transaction is in the best interests of Datatec and its Shareholders for the
following reasons:
• Strategic partner: the Equity Co-investment and the Warrant Shares issued to General Atlantic
align its interests with those of Datatec and Westcon management, and provide Westcon with
access to General Atlantic's global network and sector expertise to support its growth strategy.
Partnering with a global institutional capital provider will enhance Westcon's financial capability.
The business is at an inflection point in its evolution and the robustness of the organisation is
at a point where further scale could produce an acceleration in performance improvement while
appealing to additional technology suppliers and customers.
• Return of capital: the repayment of the Shareholder Loan and proceeds from the Equity Co-
Investment generate net cash proceeds which Datatec intends to distribute to Shareholders by
way of the Special Dividend.
• Capital structure: the Transaction replaces the intercompany Shareholder Loan with
independently structured third-party debt, establishing a standalone capital structure for the
Westcon business.
• Westcon management alignment: the reset management incentive plan aligns management
incentives with the post-recapitalisation capital structure and the long-term interests of all
shareholders.
Conditions Precedent:
The Transaction is subject only to customary conditions to drawdown of funds.
Salient Terms of the Recapitalisation:
New Senior Debt Facility
The New General Atlantic Facility has a nominal value of US$375 million, bears cash interest at 9.0%
per annum and matures in 6 years. As a consequence of the refinancing, WIGHL's interest cost will
increase. The overall interest cost and debt for the Datatec Group will also increase, as intercompany
loans are replaced with external debt.
Equity Co-Investment and Warrant Shares
General Atlantic will on closing acquire 5.0% of the issued share capital of WIGHL for a cash
consideration of US$ 25 million, and will be issued the Warrant Shares for nominal consideration. The
Warrant Shares have been structured to replicate the economic effect of 4% penny warrants and 8%
at-the-money warrants (at the current valuation) whereby General Atlantic will share in Westcon's equity
value accretion above US$ 540 million (being the current equity value of US$ 500 million plus the US$
40 million price payable for the at-the-money warrant shares).
Management Incentive Plan
In connection with the Transaction, the WIGHL Management Incentive Plan (the "MIP") has been
reorganised to reflect the post-recapitalisation capital structure of WIGHL and to align management
with the long-term interests of all shareholders.
Classification of the Transaction:
The Transaction consideration represents more than 5% but less than 30% of the Company's market
capitalisation as at the signature date and accordingly the Transaction constitutes a category 2
transaction in terms of the JSE Limited Listings Requirements.
Commentary:
Jens Montanana, Datatec's Chief Executive Officer, commented:
"After assessing various strategic options, we have concluded a structure which we believe preserves
and accelerates the winning Westcon-Comstor formula. World-class management with one of the most
experienced executive teams in the industry will continue to take the business forward while broadening
the strategy.
"Datatec, with 40 years of experience in this industry, will retain control while partnering with General
Atlantic, one of the world's leading providers of capital, as both a minority investor and lender to the
business. This partnership will provide capital as required to support exciting opportunities for expansion
in our sector.
"The structure further embeds senior management in the business as shareholders".
Leo Wouters, Managing Director at General Atlantic, commented:
"We have had a longstanding relationship with the Datatec Group. We are delighted to partner with
Jens and the Westcon-Comstor team in pursuit of the company's next phase of growth. We believe our
capital and strategic support can help to unlock compelling opportunities as Westcon-Comstor
continues to build out its product portfolio and international presence."
Special Dividend:
Shareholders are advised that, following the funding of the Transaction, Datatec intends to declare a
special dividend to Shareholders. The Special Dividend will be funded from the net proceeds of the
repayment of the Shareholder Loan and proceeds from the Equity Co-Investment. A separate dividend
declaration containing full details of the Special Dividend, including quantum, record date and payment
date, will be published in due course.
Sponsor
Pallidus Exchange Services Proprietary Limited
Financial Advisor
Lazard & Co., Limited
Legal Advisors
Squire Patton Boggs (UK) LLP
Johannesburg
19 June 2026
Date: 19-06-2026 08:00:00
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