Getronics NV, the Dutch IT services company, has swooped to buy Wang Global Inc for $2bn, creating what it claims is the largest services company in Europe and one of the five largest in the world. While Wang’s annual revenues of $3bn dwarf Getronics’ sales of $1.65bn, the US group has been weakened by its acquisition in March 1998 of Olivetti’s Olsy systems and services division.
To confirm its plight, Wang yesterday reported a first quarter net loss of $57.7m, up from $48.4m after restructuring and integration-rated charges took a $51.5m bite out of earnings. Revenue however showed a buoyant 95.7% rise to $789m as the company won a series of big new contracts.
The cash offer of $29.25 a share is a 15% premium over Wang’s closing price on Monday of $25.50 and Getronics says it represents a 39% premium over the average share price on the last 30 trading days. Headquarters of the combined company will be in Amsterdam and Wang’s chairman and CEO Joseph Tucci will join Getronics’ five-person board.
For Getronics, the acquisition is a gamble by new CEO Cees van Luijk as it takes the company from the European market onto the world stage. He is also faced with the same problem that savaged Wang’s share price of integrating a huge new operation into his own. It is necessary to follow clients… have a base in all countries so you can locally deliver standardized systems. Customers want one supplier to do all the work worldwide, he said.
Wang has concentrated on custom-built systems based on a standardized environment centered on an Intel/Microsoft platform and Cisco networking technologies. It has important partnerships with Dell Computer Corp, Cisco Systems Inc and Microsoft Corp. Among the Wang shareholders who will benefit from the offer are Olivetti, which has an 18.6% share and Microsoft, which has a 10% holding.
