Datatec - Management buyout of Analysys Mason

As a first step in its ongoing strategic review, Datatec has announced the management buyout of Analysys Mason, its TMT research and management consultancy arm, backed by Bridgepoint Development Capital for an EV of up to £210m (US$260m), 2.9x FY22 EV/sales and 14.4x FY22 EV/adjusted EBITDA (excluding share-based payment charges). Management’s strategic review, which has not necessarily concluded, has started to unpick the group’s embedded value, with the sale of Analysys Mason leaving Datatec as a simpler group with two principal businesses, Logicalis (IT services) and Westcon International (IT distribution). The maximum proceeds receivable by Datatec are US$176m (c 38% of its current market capitalisation), with the net proceeds to be returned to shareholders. As a Johannesburg-listed, global ICT play, Datatec trades at a substantial discount to both its global peer group and our sum-of-the-parts valuation. Assuming continued strong operating performance, we expect this discount to continue to narrow over time.