By Stephen Phillips
Affiliated Computer Services Inc, a rapidly-growing, Dallas-based computer services company said on Friday that it had acquired Consultec LLC, a provider of outsourced technology services to US public health programs, for $105m. The cash deal instantly gives ACS a 10% share of the $1bn IT outsourcing market for US federal government-funded Medicaid and Welfare benefit programs – ranking it second only to IT services giant, Electronic Data Systems Corp.
Atlanta, Georgia-based Consultec, a subsidiary of General American Life Assurance Co had revenue of $107m in the year to July 31. It focused on more than 20 IT services and systems administration and integration contracts with public health and welfare providers across the US. The firm will operate as an independent operation, maintaining its specialism within ACS’s Enterprise Solutions Inc unit.
ACS has shot to the top tier of US computer services firms in just 11 years of trading by adopting an aggressive acquisition strategy. Since 1988 it has bought approximately 45 companies, developing a forte in financial services and federal government contracts. The firm draws around one-third of sales from the federal government market, where it ranks among the top five IT service providers, Mark King, chief financial officer of ACS told ComputerWire. It earns 8% of revenue from contracts with financial services firms and is the second-largest non-bank operator of automated bank machines, behind Electronic Data Systems, with more than 13,200 ATMs in its network. In the twelve months to June 30, ACS recorded net income of $86.2m on revenue of $1.64bn. The firm grew revenue organically by between 15 and 16% over fiscal 1998, King said, compared to the 10% average growth rate for the US IT services firms. Including acquisitions, ACS’s sequential revenue growth rate stood at 38%.
The company’s share price stood at $40. 31 on the Nasdaq stock market at close of trading on Friday, down 0.77% for the day.
