EOH sells 70% of Construction Computer Software to RIB Software

 In news

JSE-listed information technology company EOH has sold 70% of the shares of Construction Computer Software (CCS), held by subsidiary EOH Mthombo, to Frankfurt Stock Exchange-listed construction and building software company RIB Software for R444.39-million.

EOH on Tuesday said the deal represented 8.5 times CCS’s earnings before interest, taxes, depreciation and amortisation.

There is also an option for RIB Software to buy the remaining 30% of shares by 2022.

RIB Software will pay 90% of the purchase consideration –¬ R399.95-million – in cash and will hold 10% as security for any shortfall in financial results or claims against EOH Mthombo. The remaining cash will be payable to EOH Mthombo by July 31, 2021.

CCS provides enterprise software solutions for the construction and engineering industries.

RIB Software is digitalising the construction industry with its software technology combined with a cloud platform. It has more than 500 000 licensees in almost 30 countries and is focused on growing that number to two-million over the next two years.

“CCS’s access to RIB Software’s broad development network, international business analysts and development teams will greatly enhance CCS’s growth strategy. Through EOH’s remaining 30% holding in CCS, EOH will participate in the company’s growth trajectory.

“In addition, the put/call arrangement for the remaining 30% of the shares provides an effective exit for EOH after December 2022. Potential also exists to grow the RIB relationship to a broader partnership with EOH ICT in cloud and development services,” the company said.

EOH said the transaction was a milestone in its strategy to align with key partners that enable the scaling up of unique software businesses identified within the group.

It is also a crucial step forward for EOH’s intellectual property division and RIB Software is the right partner to unlock CCS’s full potential by enabling growth and internationalisation.

Further, EOH said the deal was in line with its strategy to build the EOH of the Future by reorganising the company into an investment holding company and strengthening its capital structure.

EOH management plans to unlock R1-billion in cash through strategic partnerships and targeted disposals to reduce the group’s debt. The proceeds of this transaction will be applied mainly to a reduction of that debt and, to a lesser extent, for working capital requirements. Source: Engineering News

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