EDS has announced the largest European acquisition in its history, the planned purchase of leading German IT services firm, Systematics AG. The total cash and stock transaction is valued at approximately $570 million.
EDS expects the acquisition to close around mid-year. The acquisition is expected to be neutral to EDS` earnings for the remainder of 2001 and accretive in 2002. The combined business leverages EDS` global reach and thought leadership and Systematics` regional presence to drive revenue and cost synergies.
Systematics is recognized for expertise in CRM, ERP, digital value chain and systems integration. The company reported revenues of $570 million for the year ending Dec. 31, 2000. At year-end, Systematics reported net working capital of $41 million (46 million), net debt of $93 million, and shareholder equity of $175 million.
Assimilation of Systematics` operations will immediately double EDS` presence in Germany, Europe`s largest IT services market. The acquisition substantially broadens EDS` profile in Europe and deepens its penetration in key industry segments such as finance, government, insurance and telecommunications.
"This acquisition underscores our focus on Europe in general and Germany in particular," Chairman and CEO Dick Brown said. "EDS will be better able to bring comprehensive, targeted industry service offerings to Europe by combining Systematics` local industry knowledge and systems integration expertise with our significant strategic infrastructure outsourcing business."
In terms of the agreement, EDS will pay approximately $430 million in cash and issue $140 million in EDS shares to acquire all outstanding Systematics shares. EDS has entered into agreements with certain shareholders of Systematics to acquire approximately 70 percent of the outstanding shares for $395 million at $27 per share. On or before April 9, EDS intends to launch an all-cash tender offer for the remaining publicly held shares for $175 million or $31 per share.
The agreements are subject to closing conditions, which include clearance of the acquisition by the Merger Task Force of the European Commission and EDS` acquisition of at least 75 percent of the outstanding shares of Systematics.
"EDS and Systematics have complementary strengths and client profiles," said John Meyer, president, EDS Information Solutions, Europe, Middle East and Africa. "This acquisition will enable EDS to accelerate growth in Germany and throughout Europe. EDS will also add 2,700 highly talented professionals incentivised to support our rapid European expansion."
Systematics provides integrated e-business and IT solutions to a broad client base. It currently serves clients through four divisions: e-consulting, e-applications, systems services and hosted services. The company has a major presence in strategic business locations including Berlin, Cologne, Munich, Frankfurt and Stuttgart.
"Systematics AG is very proud of its achievements since its founding in 1985," said Detlef Fischer, chairman of the managing board of Systematics AG. "By joining the EDS family, we add global reach and thought leadership to our regional presence. We expect the combination will drive significant revenue and profit growth."
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