Nippon Telegraph and Telephone (NTT) has agreed to buy South African IT firm Dimension Data for $3.2bn (£2.1bn) as it seeks growth in emerging markets to offset a stagnant economy at home.
Dimension Data, which is a major reseller for networking equipment giant Cisco Systems, has seen growth in Asia and Africa as customers buy its expertise in bringing their IT and telecoms networks together.
NTT President Satoshi Miura said: “I want Dimension Data to be the core for NTT’s global strategy.
“Dimension Data has a strong presence in emerging markets, especially in Africa, South America and the Middle East, where NTT has a smaller presence. Its brand power is stronger than NTT’s overseas.”
Fujio Ando, senior managing director at Chibagin Asset Management, said it was a good move by NTT to have a business base in South Africa, given its growth potential.
He said: “NTT has to expand overseas operations since the Japanese market has almost reached saturation. A stronger yen provides good opportunities for Japanese companies to buy overseas assets”.
The offer, which at 120p a share represents an 18 per cent premium to Dimension Data’s Wednesday closing price, is supported by the firm’s board and largest shareholders, which combined hold 52 per cent of the stock.
South African billionaire Johann Rupert, chief executive of Swiss luxury group Richemont, and his family control 25.2 per cent of Dimension Data, while fund holder Allan Gray Limited holds 25.8 per cent. Both support the bid, but they could withdraw backing if another company comes in with a bid at least 10 per cent higher.