The Johannesburg-based company will organise its operations into four units and will sell assets that don’t fit into the new structure, it said in a statement Tuesday.
“Within the next 12 to 18 months, we plan to sell our ERP businesses in the Middle East and Africa, and a number of other companies in the Nextec unit,” Chief Executive Officer Stephen van Coller said by phone on Tuesday, referring to enterprise resource planning. “The remaining Middle East and European businesses will then be integrated into our bigger ICT business.”
While it would be viable to separately list its enlarged information-technology business that will consists of South Africa, Middle East and Europe, Van Coller said he preferred finding the right partners when needed to grow the three other units.
Stock surges
EOH surged 42%, the biggest intraday gain yet, to R18.40 by 1:03pm in Johannesburg, paring its decline over the past year to 54%.
Van Coller, a former vice president of MTN Group Ltd. and before that head of Absa Group Ltd.’s investment-banking unit, was named CEO in July last year, tasked with EOH’s turnaround after allegations of mismanagement. Microsoft Corp. canceled a contract with EOH in February following anonymous complaints.
As part of the disposal plan, EOH reevaluated its assets and impaired them by about R1.7bn. “With our new focused strategy, we had to look at the disposal value of the businesses, rather than a long-term internal value,” Van Coller said.
If the restructure is successfully implemented, EOH could boost earnings before interest, tax, depreciation and amortisation to R600m within the next 18 months from R387m, Van Coller said.
