International global service provider EDS has announced the intended acquisition of German IT services firm, Systematics AG. With the deal worth $570 million, the move marks EDS`s largest European purchase in its history.
According to EDS, the deal will double its presence in Germany, broaden its profile in Europe and deepen its penetration in finance, government, insurance and telecommunications industry segments.
Systematics is recognised for expertise in customer relationship management, enterprise resource planning, digital value chain and systems integration. The company reported revenues of $570 million at the end of 2000. At year-end, Systematics reported net working capital of $41 million, net debt of $93 million, and shareholder equity of $175 million. EDS reported revenues of $19.2 billion in 2000.
"This acquisition underscores our focus on Europe in general and Germany in particular," says EDS chairman and CEO, Dick Brown. "EDS will be better able to bring comprehensive, targeted industry service offerings to Europe by combining Systematics` local industry knowledge and systems integration expertise with our significant strategic infrastructure outsourcing business."
In terms of the agreement, EDS will pay approximately $430 million in cash and issue $140 million in EDS shares to acquire all outstanding Systematics shares. EDS has entered into agreements with certain shareholders of Systematics to acquire approximately 70% of the outstanding shares for $395 million at $27 per share. On or before 9 April, EDS intends to launch an all-cash tender offer for the remaining publicly-held shares for $175 million or $31 per share.
The acquisition is expected to close around mid-year, and EDS says it will be neutral to its earnings for the remainder of 2001 and accretive in 2002.
"EDS and Systematics have complementary strengths and client profiles," says John Meyer, president, EDS Information Solutions, Europe, Middle East and Africa. "This acquisition will enable EDS to accelerate growth in Germany and throughout Europe. EDS will also add 2 700 highly talented professionals, incentivised to support our rapid European expansion."
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