NTT Data has offered 6.20 euros ($8.8) in cash per share to acquire Itelligence, which represents a premium of 47.3% on the target company’s average share price over the last three months. The Japanese company described the $104m offer as friendly and said the acceptance period for the offer would start in the middle of November, and should be completed by early 2008.
As a first step, the two companies have set up a partnership through which they will swap best practices and knowledge bases. Hubert Vogel, the CEO of Itelligence, has already agreed to accept the offer and to tend more than half of his and his wife’s stake in the company. He plans to stay on after the purchase is completed, with Itelligence remaining a separately listed division within NTT Data.
Itelligence is one of the largest of Germany’s large community of SAP services specialists. It focuses on providing systems integration and applications management services to midmarket customers and has 1,200 employees based in 15 countries.
The company turned in a strong performance in full-year 2006 with net profit up 34% to 5.5m euros ($7.8m) and revenue rising 18% to 163.8m euros ($233m). Some 45% of revenue came from Germany, with 28% coming from the Americas. Earlier this week, it gave positive preliminary figures for the first nine months of this year, with sales increasing by 16.4% and pre-tax profit more than doubling to 7.8m euros ($11m).
Our View
NTT Data ranks as the world’s 11th largest IT services organization based on its revenue in the fiscal year ending March 2007 of $8.5bn.
This placed it some distance behind the global services divisions of European operators BT Group and Deutsche Telekom, which made annual sales of $18bn and $17bn respectively, and one of the reasons for this disparity is that NTT Data has been almost exclusively focused on its domestic market to date.
In May 2007, the company said that it was looking to increase its presence in both North America and Europe through the acquisition of medium-size systems integrators, and was aiming to grow its overseas business from JPY 15.6bn ($128m) in fiscal 2007 to JPY 28.5bn ($234m) next year, with some JPY 12bn ($99m) expected to be added by M&A activity.
The company paid an undisclosed sum to acquire Chicago, Illinois-based Revere Consulting in November 2005. Although the deal was relatively small – Revere brought 300 employees in ERP consulting – NTT claimed that the move was a big first step in our business expansion in the global marketplace.
NTT Data’s approach for Itelligence also highlights the large amount of M&A activity we have seen around the SAP services market in the last 18 months, as vendors look to acquire the SAP skills that are becoming more difficult to recruit organically. HP Services and Ciber Inc have both swooped for SAP integrators in the last fortnight.
