IT services provider Group Steria SCA is in exclusive negotiations to acquire Mummert Consulting AG, a privately owned German IT services company.
Paris, France-based Steria said that it had made a cash-based offer for the company, which (if accepted) would be accretive to earnings in the first year. It also claimed that the proposed alliance would create a player ranking among the top ten IT services providers in Germany with annual revenue in the country of almost 200 million euros ($250 million) and would consolidate Steria’s position in the top ten in Europe.
Mummert boasts annual revenue of around 140 million euros ($175 million), more than 1,000 employees, and an operating margin of approximately 5% in 2004. The Hamburg-based company’s main vertical market is financial services – from which it made 57% of its revenue last year – followed by the public sector with 23% and utilities 11.5%.
Steria said it was considering acquisitions in Germany last month when it released its results for the first half of 2004, which revealed slight sales and profit growth.
There are signs that the German market is returning to growth after a disastrous start to the millennium. Contract signings are increasing – ComputerWire’s IT Services Contract Database lists 84 contracts announced in the last year (to September 30 2004), worth a total of $6.3 billion, compared to 76 contracts worth $5.7 billion in the previous year. Eleven contracts signed in the last year were worth $100 million or more compared to eight in the previous year. Also, some of the main players in Germany have recorded improvements – T-Systems, which is the largest outsourcing provider in Germany, announced adjusted total revenue up by 2.5%, and Capgemini which has had a poor year in most markets, recorded its strongest growth in central Europe, up 11.5% in the second quarter of 2004.
Steria’s move follows on from other French companies making acquisitions in Germany: in July 2004 Unilog bought Avinci and last month Atos Origin bought Itellium, the IT unit of KarstadtQuelle AG.
Consolidation in the German market in continuing at a steady pace. Last week, advisory firm Technology Partners International said that there were around 20 captive IT services subsidiaries of Germany companies that were in talks to be sold. Following the sale of Triaton, the IT services arm of ThyssenKrupp AG for $430 million earlier this year, RAG Informatik, the captive operation of the coal producer RAG Aktiengesellschaft has been on the block all year, but no announcement has been made yet. Other completed acquisitions have included T-Systems’ purchase of vacuum cleaner producer Vorwerk’s captive, Zeda in November 2003 and Capgemini bought the IT subsidiaries of Draegerwerk AG in December 2004.