MCN Direct Newswire

Vol. 6 No. 16, 6 August 2007

This issue is sponsored by:

CODA, Annual Consultants' Forum 2007 and Top-Consultant

This issue news

1. Steria buys Xansa for £472m
2. LogicaCMG ousts board director
3. Capgemini fields team for Rugby World Cup
4. EDS chairman Michael Jordan moves on
5. IBM clinches $1.4bn outsourcing deal
6. Further information - feedback/pass on to a colleague/remove from mailing list

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1. STERIA BUYS XANSA FOR £472m

French IT services company Steria has agreed to acquire UK-based business process outsourcing specialist Xansa for £472 million.

Steria believes the takeover will accelerate its strategy of developing an advanced IT services business model - bringing together business transformation and business operation services, and offering an approach that is customised to the client but includes an industrialised delivery model.

In 2001, Steria acquired Integris, the non-French IT services business of Bull, and in 2004 it acquired German consultancy Mummert.

Steria says the merger with Xansa will create a top 10 European IT services provider, delivering pre-tax gains of €24 million (£16 million) in 2008, €49 million in 2009 and €53 million from 2010 onwards at a cost of €49 million over two years.

Xansa, which is without a chief executive following the departure of Alistair Cox to Hays Group, is recommending the offer to shareholders and expects the deal to be concluded by the end of October.

Xansa's acting chief executive, Bill Alexander, commented: "On behalf of the board of directors of Xansa, I am pleased to recommend Steria's offer. We are confident that our recommendation is in the best interests of Xansa shareholders and offers an opportunity for our employees to be part of a culturally aligned, pan-European company able to leverage our integrated onshore/offshore model."

Xansa's latest statistics show a company with over 8,000 employees, 5,000 of whom are based in India. Pre-tax profit for the year to 30 April 2007 was £16.4 million, on revenue of £379.7 million.

Steria, which is headquartered in Paris, has 10,000 employees working in 15 countries, predominantly in Europe. It reported pre-tax profit of €77.9 million (£52.7 million), on revenue of €1.3 billion in 2006.

2. LOGICACMG OUSTS BOARD DIRECTOR

LogicaCMG has asked Didier Herrmann to step down from its board with immediate effect, following his failure to agree on how to take the company forward. The demotion adds another chapter to the company's struggles as it seeks a new CEO and a return to revenue growth in the UK.

Herrmann joined the LogicaCMG board in 2005 following its acquisition of Unilog, a French consultancy and IT services company of which he was CEO. He continues to hold responsibility for the French business, which has shown strong performance within the group, but is not expected to stay with LogicaCMG for long after falling out with chairman Cor Stutterheim, interim CEO Jim McKenna and the rest of the board.

LogicaCMG stated: "Didier Herrmann played an important role in the integration of Unilog. In 2006, the Unilog business delivered over £65 million of cross-selling orders and £10 million of cost savings. The board would like to take this opportunity to thank Didier for his contribution to the business."

As the exit door opens for one member of the board, LogicaCMG made no further comment on who will step into the shoes of retiring CEO Martin Read.

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3. CAPGEMINI FIELDS TEAM FOR RUGBY WORLD CUP

Capgemini has launched the official, trilingual Rugby World Cup 2007 website as part of its sponsorship of the world's third largest sporting event.

Following an international call for tenders, Capgemini was chosen by Rugby World Cup to design and manage IT systems for the tournament on an exclusive basis. Capgemini has introduced a ticketing service, put up the official website and is developing a statistics system that will provide data in real time to the stadia's giant screens, as well as to television broadcasters, mobile phone operators and press agencies.

Capgemini CEO Paul Hermelin said: "Capgemini is proud to be involved in this international event and has mobilised its best teams so that it is up to this unprecedented technological task. Being a partner in the Rugby World Cup 2007 is also an opportunity to promote our professional disciplines and skills, and increase our brand recognition."

Separately, Capgemini reported first-half net profits up 137% on last year's comparable period at €168 million (£113 million), on revenue rising 16% to €4.4 billion. The UK was not among the leading growth areas of the Nordics and southern Europe, but it contributed to a 13% growth in outsourcing services based on large deals signed in late 2005 such as the Aspire contract with the Inland Revenue.

4. EDS CHAIRMAN MICHAEL JORDAN MOVES ON

EDS has promoted president and chief operating officer Ron Rittenmeyer to the post of CEO with effect from 1 September. He also becomes a member of the company's board of directors.

Rittenmeyer replaces Michael Jordan, who joined EDS as chairman and CEO in March 2003 with a remit to turn the company around after its finances crashed in 2002 under then CEO Dick Brown.

Jordan regained control of the company, tightened its focus and returned EDS to profitability, albeit in an improving market. Now 71 and with EDS back on track, he is expected to hand over his leadership position this year but will continue to serve as chairman of the company.

Commenting on Rittenmeyer's promotion, Jordan said: "There is no better person to lead EDS at this pivotal stage in its 45-year history than Ron Rittenmeyer. Under his leadership, EDS completely transformed its entire sales and delivery operations, while delivering dramatic improvements in quality and productivity."

Rittenmeyer joined EDS in 2005 as executive vice president of service delivery and was later promoted to chief operating officer, before being appointed president in December 2006. Prior to joining EDS, Rittenmeyer was managing director of private equity firm The Cypress Group.

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5. IBM CLINCHES $1.4bn OUTSOURCING DEAL

IBM has won a $1.4 billion (£688 million) global strategic outsourcing contract from pharmaceutical giant AstraZeneca.

Under the seven-year deal, which expands on an existing similar-length contract, IBM will provide a single global technical infrastructure to 60 countries and manage AstraZeneca's IT services across the organisation. AstraZeneca will retain control over overall IT strategy and the development and support of its applications systems.

IBM senior vice president Doug Elix said: "The trust we have built over the past seven years will help IBM and AstraZeneca break new ground in transformational services in the next seven years."

Richard Williams, chief information officer of AstraZeneca, said: "Leveraging IBM's global delivery capabilities and economies of scale will allow AstraZeneca to focus its efforts on adding value to its scientific, commercial and supply operations, helping the company to deliver more medicines that make a meaningful difference to patients."

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