EDS in Europe....
EDS to Acquire Germany's Systematics
As Part of Expansion Effort in Europe
A WSJ.com News Roundup
PLANO, Texas -- Electronic Data Systems Corp. on Monday announced a deal to buy fast-growing German computer-services company Systematics AG for about $570 million in cash and stock, in an effort to expand in continental Europe.
It marks the second acquisition in less than a month for EDS Chief Executive Richard Brown, an active deal maker at his previous job at the helm of London's Cable & Wireless PLC. On March 15, the Plano, Texas, computer-services company said it agreed to buy most of Sabre Holdings Corp.'s outsourcing operations for $670 million.
EDS said Monday it will pay about $430 million in cash and issue $140 million in stock to acquire all outstanding Systematics shares.
EDS agreed with certain Systematics shareholders to acquire about 70% of the outstanding shares for $395 million, at $27 a share. EDS plans to launch on or before April 9 an all-cash tender offer for the remaining publicly held shares for $175 million, or $31 a share.
EDS expects the transaction, scheduled to close around mid-year, to be neutral to 2001 earnings but add to 2002 earnings.
Systematics, based in Hamburg, is a 16-year-old information-technology outsourcing and consulting company that is tripling annual revenue, largely through its acquisition of MSH International Service AG, Frankfurt, last April.
Systematics reported net income of 123,000 euros ($107,994), or 1 European cent a share, on sales of 433 million euros during the first nine months of last year. That compares with net income of 6.7 million euros, or 52 European cents a share, on sales of 193 million euros, a year earlier.
Excluding the MSH acquisition, Systematics still increased sales at a 95% annual clip during the first nine months of last year. Systematics' work force stood at 2,720 employees at the end of September, up from only 512 a year earlier.
EDS, with $19.2 billion in revenue last year and 122,000 employees, plans to keep all Systematics employees, including management.
As of 4 p.m. Friday in New York Stock Exchange composite trading, EDS shares were at $55.86, up $1.56.
Systematics is expected to double EDS sales in Germany, where it has had little presence. EDS gets about one-quarter of its sales in Europe, but about half of that comes from the United Kingdom. Systematics has 66 offices in Europe, including 38 in Germany.
Wall Street Journal staff reporter Elliot Spagat contributed to this article.
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