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January 16, 2006

EDB acquires two divisions of Ementor

IT services vendor EDB Business Partner ASA has acquired two divisions of struggling local rival Ementor ASA for a combined total of NOK 259.5m ($39.1m).

By CBR Staff Writer

EDB will pay Ementor NOK 100.5m ($15.1m) for its Avenir operation, which is headquartered in Oslo, Norway and provides a range of services including application management, consulting and systems integration. Avenir employs 241 staff, with 200 located in Oslo and the remainder in Bergen, and is forecast to record revenue in 2005 of approximately NOK 220m ($33.2m).

Earlier this month, Avenir won a contract valued at NOK 3.5m ($525,000) to provide application development services to the Norwegian immigration directorate.

Oslo, Norway-based EDB will pay an additional NOK 159.5m ($24m) to acquire Spring Consulting, Ementor’s IT consultancy division. Under the terms of the deal, EDB will take over 100% of Spring’s operations in Norway and Sweden, as well as 63% of its Danish subsidiary.

Spring has a total of 114 staff spread across these three countries, and recorded sales of NOK 130m ($19.6m) in 2005. In the event of 2006 revenue exceeding NOK 146m ($22m), EDB will pay an additional NOK 28m ($4.2m) to Ementor.

Spring specializes in implementing and developing SAP applications, but also provides consultancy services around customer relationship management, business intelligence, human resources, and workflow.

Following the announcement of the takeovers, shares in Ementor fell 4% on the Oslo stock exchange. EDB’s share price was up about 0.5%.

The purchases come less than a week after EDB announced the acquisition of Swedish document management company Datarutin AB for approximately $23.3m. In December 2005, EDB paid $37.8m for bankcard services company TAG Systems AS.

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Ementor endured a torrid 2005, with sales in the first nine months of the year down 15%. As part of a comprehensive restructuring process, the company sold its Finnish subsidiary to IT firm Kuopion Puhelin Oyj for NOK 56m ($8.4m), and its outsourcing divisions in Sweden and Norway to local rival ErgoGroup AS for approximately NOK 200m ($30.1m).

EDB is currently the largest player in the Norwegian IT services market, valued by IDC at $1.2bn in 2004, with Ementor ranked in third place. However, the local players are coming under increasing pressure from global giants such as IBM Global Services and Hewlett-Packard.

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