Several other IT services providers including Computer Sciences Corp have shown an interest in acquiring part of the $3 billion SchlumbergerSema operation, but ComputerWire understands that Paris-based Atos Origin, which has a strong track record of integrating acquisitions, is now negotiating a deal. Both companies declined to comment when contacted on September 19.
New York-based Schlumberger has struggled for the past two years to make its $5.2 billion takeover of Sema a success. The company took a $3.2billion goodwill write-down and restructuring charge relating to the deal in its fourth quarter ended December 31, 2002. At the same time, SchlumbergerSema announced that it was cutting 1,600 jobs across its activities in the US and Europe to meet reduced market demand.
Schlumberger’s initial rationale behind the Sema takeover was to enable the group to take on larger contracts for its oilfield services clients, covering everything from running data collection processes through to desktop and applications management.
Although Schlumberger is keen to hang on to the portion of the former Sema business focused on the energy industry, other operations such as its UK outsourcing business (strong in the government sector) and French systems integration practice (strong in the banking sector) are now viewed as being less strategic, particularly given the increasing competition in these areas.
If a deal goes ahead, it would represent Atos Origin’s third major takeover in as many years. It merged with Origin NV, the IT consulting and services division of electronics giant Royal Philips NV in a $2.3 billion deal in November 2000. Last August, it completed the acquisitions of the UK and Dutch arms of KPMG Consulting for a combined E657 million ($744 million).
One source in the investment community told us: Atos Origin does not have the cash resources to fund a big acquisition at present, but there are a variety of structures it could use such as running the acquired business as a joint venture, or allowing Schlumberger to retain a stake. The Atos Origin management team has proved its ability to successfully integrate acquisitions in the past, but it would face balance sheet challenges.
Atos Origin chief executive Bernard Bourigeaud pointed out earlier this month that Atos Origin’s net debt fell to E386 million ($432 million) at the end of June from E440 million ($492 million), and claimed that the figure would fall to E350 million ($391 million) by the end of 2003. The company has recently raised funds through asset sales, including the disposal of its Hungarian operation to local systems integrator Synergon Informatika Kft, and the sale of its document management and cheque processing activities to Experian.
This article was based on material originally published by ComputerWire
