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Thursday 16 May 2019

Totvs finds hardware and software don’t mix – finally

logoBrazilian ERP market leader Totvs (pronounce the ‘v’ as ‘u’) has finally backtracked on what has been labelled in the Brazilian media (with thanks to Angelica Mari at Brazil Tech) as “one of the wors(t) deals ever seen in the Brazilian IT sector”, selling off its retail industry POS hardware business Bematech for just R$25m (c.USD6.2m). Founding CEO Laércio Cosentino announced the acquisition of Bematech in August 2015 for R$550m (see Major POS acquisition for Brazilian Totvs).

I had always been extremely sceptical (moi?) about this deal (see Acquisitions Brazilian style) mainly on the basis that it’s hard to find a successful acquisition of a hardware player by a software firm anywhere in the world (you know the address to write to if you find one). I was also concerned about the distraction this would cause to both businesses and indeed my worries came to pass pretty much straight away when Bematech’s profits crashed (see Totvs: the cost of buying market share), followed a few months later by Totvs’ (see Bematech drags Totvs).

Current CEO Dennis Herszkowicz was philosophical about the decision to ditch Bematach: “We have a long history of successful M&As, with a lot of value created over the years, but clearly we did not get it right in 100% of the occasions – and the purchase of Bematech hardware was one such case.” Herszkowicz joined Totvs in November 2018 in a second attempt by Cosetino (now chairman) to hand over the reins of the business.

Cosetino’s first attempt was just months before the ill-fated Bematech acquisition, when he hired ex-IBM Brazil CEO Rodrigo Kede Lima as President and CEO-in-waiting (see New man at Totvs looks to upset Sage’s LatAm plans). Barely six months later Lima returned to IBM (see Kede goes back to Blue) where he is now General Manager - IBM Global Technology Services - North America (and some would say, destined for greater things). I had always assumed his impromptu departure from Totvs was on account of differences of opinion with Cosetino over the Bematech deal. Whether or not the case, this was clearly the wrong deal.

Posted by Anthony Miller at '07:58' - Tagged: disposal   brazil  

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