Listed technology group EOH is set for a major restructure which will see it form two independent businesses.
The IT service management company has come under some pressure over the past several months relating to allegations of government tender irregularity, which saw its share price plummet in mid December. The group has however, begun to make some progress in restoring its damaged reputation in 2018.
In a statement on Monday, EOH said: “Following a strategic review of its business, EOH has decided that for the long-term benefit of all stakeholders it shall form two independent businesses within EOH, each of which will have its own brand and identity, growth strategy, go to market approach, business model, and culture.”
The two independent businesses will be branded as follows:
- One will continue to trade under the EOH brand; and
- The second business (NewCo) shall create and launch its own brand and identity in the coming two months.
EOH said it has grown significantly over the past 20 years, now employing approximately 13,000 people and servicing over 5,000 large customers.
Shares in EOH climbed by a rand or 1.36% to R73.99 in mid-morning trade on the JSE, having slumped to below R27 in late 2017.
The key characteristics of the business continuing under the EOH brand are:
- End-to-end information communication technology (ICT) offering;
- Integrated go to market strategy;
- Cross-industry intellectual property (“IP”);
- Growth is mainly organic;
- Cross-selling opportunity with existing customers;
- Highly proficient system integration as a market differentiator;
- New generation digital technologies driving growth.
Approximately 55% of EOH’s group revenue is currently generated by this business.
The key characteristics of the business to trade under the “NewCo” brand are:
- High degree of specialisation in each of the businesses;
- Deep levels of expertise;
- Domain specific IP;
- Growth driven equally by acquisitions and organically;
- Business units operate relatively autonomously;
- Differentiated by vertical specific offering;
- Operates in high growth industries.
Approximately 45% of EOH’s group revenue is currently generated by NewCo’s business.
“This strategy will form the backbone of a new phase in EOH’s growth and development, the company said.
EOH also announced a partnership with Lebashe Investment Group in which it will gain access to a R3 billion funding facility. Lebashe will subscribe for new ordinary EOH shares for R250 million.