Cisco surprises with all-share equity deal

[rpm]

http://mybroadband.co.za/news/Hardware/1215.html

 

[McSack]

The price Lereko will pay for its shares has already been fixed, but will be whittled down if the political and business clout of its members opens doors and grows the local subsidiaries above some preset targets.

What IT business clout could Popo and Vali possibly have?

Oh wait...wasn't Popo a beneficiary of one of the "Kebble Scams"?

 

[antowan]

I am just amazed at the amounts of money some people have access to... Where did the enitial seed for all these billions come from? It sounds like there is a list being worked down at the ANC and Pop and Vali are currently up for money!

It is a bloody circus and Cisco has lost some credibility in my view.

 

[antowan]

The price Lereko will pay for its shares has already been fixed, but will be whittled down if the political and business clout of its members opens doors and grows the local subsidiaries above some preset targets.

Now if that isn't corruption, I don't know what is???

Sounds like every miserable African country already! Maybe we are the last to know....

 

[McSack]

I am just amazed at the amounts of money some people have access to... Where did the enitial seed for all these billions come from? .

What bank is not going to see equity in a loan for shares in an international company at around 30% discount? (whispered in my ear by a little birdie regarding share price to Lereko). On top of that there's the additional "structuring" around when and how payment needs to be made

So all it takes is to be well connected to the ANC

 

[Wyzak]

Just another reason to leave this corrupt crime-ridden racist country

 

[Abe]

Is it just me or does anyone fail to see the disadvantaged benefiting from this deal. The only people I see benefitting are people who are already well off.

 

[biltonguy]

Companies opting to invest more heavily in social development rather than sell shares claim they are doing more to promote widespread empowerment, since shares are often sold to the usual fat-cat investors.

And that just says it all...shame on you Cisco

 

[fskmh]

The value of the deal was not disclosed, but must run into more than R100m. Last month the US computer company HP announced an equity equivalent deal that pushed its total investments in empowerment compliance to R150m.

Rather than question the bona fides of this deal, let's rather ask what Cisco was buying for R100m/7.237=$13.8m.
From a business perspective this buys them a lot of government goodwill. If you believe that D-Link, for example, is more capable of supplying superior kit at high volumes then you might see this as one company preempting another that arguably has a superior product line.

The fact that Cisco has chosen to sell some shares may raise questions about how genuine the protests by US technology companies were when they railed against government demands for every company to have local black owners. Their protests, backed by the American Chamber of Commerce, led to the equity equivalent compromise.

This is a superficial assessment at best. One merely has to visit their webpage (http://www.amcham.co.za/) to see that "there are currently approximately 600 US companies with a presence in SA, of which 340 are wholly-owned subsidiaries." U.S. businesses exist to serve their investors, not the ideological dictates of small foreign markets. A cursory glance at the lists of non-executive directorships, direct government shareholding and indirect (P.I.C.) shareholding of parastatal and private assets induces such nausea that one would not be physically fit to pass judgment on U.S. businesses.

Companies opting to invest more heavily in social development rather than sell shares claim they are doing more to promote widespread empowerment, since shares are often sold to the usual fat-cat investors.

Enough said.

Lereko, Cisco staff and the education trust will receive shares in the parent company worth 25,1% of the value of a new division supplying services to major customers in SA. The employees and education trust will also receive shares worth 25,1% of Cisco Capital SA, which finances deals for customers buying its equipment, and shares worth 20% of Cisco’s local sales and marketing division.

So in effect it becomes a local subsidiary, just like the other 340. The shares are only worth something while the local sales are healthy, no?