Dimension Data Completes Proxicom Acquisition

Dimension Data Holdings plc Monday iced its deal to buy Proxicom Inc., a little more than one month after the $2 billion E-business and networking services provider outbid Compaq for the Reston, Va., E-services provider. The deal adds an E-business application and consulting component to Dimension Data's worldwide networking and infrastructure services.

Dimension Data views E-business services from two perspectives--infrastructure and applications. While Dimension Data has been implementing networking infrastructure technologies since 1983, the South African company is now looking to add complementary services that integrate applications with connectivity tools from the likes of Cisco, Lucent, Nortel, and Novell, says chairman and CEO Jeremy Ord. "On a global scale, we'll consolidate our E-business application integration groups worldwide under the Proxicom umbrella," Ord says. "The real benefit to consolidating E-business services under [Proxicom CEO Raul] Fernandez is to be able to go out and offer infrastructure and applications together."

Dimension Data believes E-business can only deliver on its promise of secure, ubiquitous access to business applications if IT systems' scalability is commensurate with usage. Early E-business solutions built infrastructure and applications that served internal processes like directory management out to the Internet, but this isn't scalable, says Richard Came, a director with Dimension Data.

Ord points to technology like Microsoft's HailStorm and IBM WebSphere as a way to bundle and manage user identification and passwords for multiple applications in a single location on the network. The Proxicom acquisition takes on more importance because service providers will need a hybrid of application and network E-business skills to serve their customers in this way, Ord says.

Dimension Data has E-services units in several locations worldwide. With Proxicom, Dimension Data unifies its E-business application systems integration resources under a single unit, which will retain the Proxicom brand until at least 2002.

Dimension Data will pay roughly $376 million, or $7.50 per share, to acquire Proxicom, which has net assets of about $148 million. Compaq had offered Proxicom $266 million, or $5.75 per share, prior to Dimension Data's bid.