LogicaCMG, the IT services group, has agreed an Skr11.9 billion (£882 million) deal that will take it a step closer to becoming one of the world’s ten largest IT services group.
The Anglo-Dutch company is launching an offer to buy WM-data, its Scandinavian rival listed on the Stockholm Stock Exchange.
However the shares droped 6.1 per cent to 162p.
Hans Slob, analyst at Rabo Securities, told Reuters: “LogicaCMG are paying way too much. The synergies are limited because LogicaCMG is small in the Nordics. I expect the shares to come off even more after the 6 percent fall we’ve seen so far.”
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LogicaCMG say the enlarged group will become one of the world’s largest twenty IT services companies by revenues, and the seventh largest in Europe. By market capitalisation the group becomes Europe’s second largest operator.
The deal will add 9,000 employees, taking the business to 40,000 workers in 41 countries, with combined revenues of more than £3 billion for the year to December 31 2005.
Shareholders representing 23.2 per cent of WM-data’s shares, and 53.2 per cent of voting rights, have committed to accept the offer.
The group’s shares were trading down 10.75 per cent, or 6.2 per cent, at 161.75p at 10.30am. Analysts said the company had paid a full price for the company, with some questioning the possible synergies.
The deal comes after LogicaCMG last September agreed a £626 million deal to buy Unilog, France’s sixth largest IT services group.
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The acquisition will sit alongside the company’s existing operations in the UK, France and Netherlands and put it on course to develop a fourth significant operation in Europe, in line with its long term strategy.
Martin Read, chief executive, said: “WM-data’s leading position in the Nordic region will complement our existing strong positions in the UK, the Netherlands and France. The geographical overlap between the two companies is minimal and there are significant opportunities to cross-sell products and services across the two businesses. There is also a strong cultural fit between the two organisations.”
He said customers were increasingly keen on working with a smaller number of larger suppliers who can supply them with a broader range of services.
At present LogicaCMG has only a limited presence in the Nordic countries.
The group, which was formed in December 2002 with the merger of Logica and CMG, will issue 409 million new shares, raising £705 million to help fund the cash and shares deal.
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“LogicaCMG are paying way too much. The synergies are
limited because LogicaCMG is small in the Nordics. I expect the
shares to come off even more after the 6 percent fall we’ve seen
so far,” said analyst Hans Slob at Rabo Securities.