Logica Plc’s spending spree continues, as the London-based systems integrator and IT consultancy is expanding its interests as an SAP implementer with the acquisition of Coventry, UK-based Team 121 (Enable) Ltd. Logica will pay 88.3m pounds ($139.5m) for Team 121, made up mainly of cash and new Logica ordinary shares. Of this, 13.8m pounds ($21.8m) worth of shares will go to key senior managers of Team 121. CEO Iain Barker, a former UK manager of SAP who set up Team 121, stands to pick up around 50m pounds ($79m) in total.
The takeover seems to have been mutually agreeable. Logica has been looking at increasing its ERP capabilities, while Team 121 has been actively courting investment from other IT companies for the past six months. Team 121, which will be fully integrated into Logica, will now form the basis of a new UK-based ERP competence center adding to Logica’s existing ERP operations in France, Belgium, the Czech Republic, the US and the Far East. It will also provide a launch pad for increasing ERP-related services in continental Europe.
The acquisition gives Logica the capacity to link its growing business in front-office solutions, including customer relationship management and e-commerce, with Team 121’s back-office SAP skills. This will allow Logica to compete in the growing business process outsourcing market for SAP. In return, Team 121 will receive greater European opportunities and the chance to bid for contracts in a number of sectors in which it does not currently compete, including the financial services, government, telecoms and defense sectors. Team 121 managing director Gary Speksnyder believes Logica will now be in a position to challenge fellow European service providers such as Origin and Bull for SAP implementation contracts.
The attraction of Team 121 to Logica is obvious. Team 121 has seen rapid growth since its establishment in 1990. Revenue for the year through April 30 reached $58.4m, an increase of 115% over the previous year. Orders continue to flow in, most recently from UK utility Yorkshire Water. Team 121 had considered an initial public offering on the London stock market last year. At the current rate of growth, Logica may have picked up a bargain, despite the apparently high selling price.
This latest purchase is unlikely to be Logica’s last. The company has now spent around 175m ($276.5m) pounds on six acquisitions in the last twelve months. The company is reportedly prepared to spend several hundred million pounds to further expand its business.
