7th Jan 2005 12:38
7 January 2005LogicaCMG Finalises Acquisition of Controlling Interest in Edinfor in Portugal- Acquisition of controlling stake in leading Portuguese IT services provider- Outsourcing contract with Energias de Portugal worth Euros 510 million over10 years- Strengthens global energy and utilities businessLogicaCMG announced today that it has concluded an agreement to acquire a 60%controlling interest in Edinfor SA, the IT business of Energias de Portugal(EDP), with arrangements that purchase the remaining shares. Based on anEnterprise Value of Euros 135 million, LogicaCMG will pay Euros 81 million (GBP57 million) in cash on completion, expected to be in early 2005 followingclearance from the competition authorities. LogicaCMG expects the addition ofEdinfor to be modestly earnings accretive in its 2005 financial year.As part of the transaction, LogicaCMG has signed a contract with EDP worthEuros 510 million (GBP 359 million) to provide IT outsourcing services for tenyears. Additional IT resources will be provided to EDP on an ongoing basisunder a preferred supplier framework agreement.The minority interest is the subject of a put/call option, exercisable by EDPafter two years and by LogicaCMG after four years. The ultimate considerationis dependent on the performance of the business and is subject to a floor and acap.Edinfor is one of the largest IT services providers in Portugal and hasoperations in Spain and Brazil. It employs some 1,300 people who deliversolutions across a wide range of industries, in addition to energy. Edinforwill benefit from LogicaCMG's international profile and proven methodologiesand will become part of LogicaCMG's global delivery organisation.The total adjusted net assets acquired are expected to be approximately Euros80 million (GBP 56 million). Earnings before interest, tax, depreciation andgoodwill amortisation (EBITDA) for the year ended 31 December 2003 was Euros34.1 million (GBP 24 million), giving an operating margin of 5%. Revenue for2004 is expected to be around Euros 175 million (GBP 123 million).The partnership with EDP provides a platform for growth:- One of the largest outsourcing contracts awarded over the last year inmainland Europe and a powerful reference point for winning new contracts- Strengthens LogicaCMG's position in energy and utilities, one of its keymarket sectors- Edinfor is a leading Portuguese IT company with scope for expansion in Spainand in South America from its significant operation in Brazil- Edinfor is an additional nearshore resource for the LogicaCMG Group, with amajor data centre and skills including SAP consultants, which can be deployedon cross-border projects.The current structure of the Edinfor business - including an up to datetechnical, commercial and support infrastructure - will be largely retained.Jim Yeats from LogicaCMG will become chief executive, reporting to Jim McKennaon the LogicaCMG Group board. Jim Yeats was most recently managing director ofLogicaCMG UK's energy and utilities division.Commenting on the transaction, Dr Martin Read, LogicaCMG's Chief Executive,said:"We look forward to working with EDP to deliver excellent services that enhanceboth their business and that of Edinfor. The deal reflects LogicaCMG'sstrengths in energy and utilities and in outsourcing, significantly broadeningthe propositions we can take to our customers across the group."For further information please contact:Will Cameron - media relations 020 7446 1786 (mobile: 07771 815414)Mark Broughton - media relations 020 7446 1097 (mobile 07880 560 345)Tony Richards/Frances Gibbons - investor relations 020 7446 4372 (mobile: 07733260393)Toby Mountford - Citigate Dewe Rogerson 020 7638 9571 (mobile: 07710 356611)Seb Hoyle - Citigate Dewe Rogerson 020 7638 9571 (mobile: 07799 476804)Note:LogicaCMG will make a pre-close trading statement on 18 January 2005 and willannounce its preliminary results for the year ended 31 December 2004 on 2 March2005.ENDRelated Shares:
LOG.L