The largest Latin American producer of enterprise software, Totvs, agreed to sell its hardware business Bematech as part of a plan to dispose of non-core assets.
The company, which was purchased in 2015 for about 550 million reais ($137 million) was sold to Elgin for a meagre 25 million reais ($6.2 million), making it one of the worst deals ever seen in the Brazilian IT sector.
Four years ago, Totvs had planned to be able to sell its software offerings to more than half the restaurants, retailers and hotels in the country that use Bematech's point of sale printers. However, things didn't work out so well:
"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," the chief executive at Totvs, Dennis Herszkowicz, said during an analyst call.
The Brazilian firm's new area of strategic focus is fintech. Last month, Totvs launched a new division which will combine its own enterprise software with financial offerings developed by startups.
Under the new division, the enhanced products will be offered to organizations within sectors such as retail, education, healthcare and manufacturing.
One of the initial projects under the new strategy includes the development of systems geared at small and medium retailers, aimed at capturing and processing data related to credit and debit card payment transactions.