British Telecommunications Plc’s systems integration division Syntegra has paid 217m pounds ($341.8m) for Control Data Systems Inc, the former mainframe company which these days does business as a systems integrator. The UK incumbent telco said Control Data adds depth and e-commerce expertise to its US operations, but analysts commented that this seemed an inadequate return on the price paid for the Arden Hills, Minnesota company.
Syntegra currently concentrates on the US financial services market, implementing trading systems chiefly in the New York area. Gaining Control Data’s expertise in e-commerce systems will be critical in the US, the largest and most mature electronic marketplace in the world, a BT spokesperson said.
Overall, Syntegra gets a larger footprint in the US, adding Control Data’s 750 US employees to 100 of its own US-based workers. Control Data has another 350 worldwide, including operations in Taiwan and China.
However, Joe Treese, a senior analyst at Forrester Research in Cambridge, Massachusetts, said BT has paid a fairly high price for Control Data. Forrester reckons the going rate for buying services firms works out at between $100,000 and $150,000 per acquired employee. BT, however, is paying about $310,000 for each employee.
Control Data started out selling mainframes designed by Seymour Cray and has repositioned itself as a services firm. Treese warned that the combined company would still face stiff competition from the Big Five accounting houses in the US market and BT’s lack of staff in the US might prove to be a problem.
