20th Feb 2007 12:00
20 February 2007
LOGICACMG ANNOUNCES ‚£265 MILLION SALE OF TELECOMS PRODUCTS AND ‚£130 MILLION SHARE BUYBACK
LogicaCMG today announces the conclusion of a sales process for its Telecoms Products division ("the Business") with the divestment of the Business to an investment consortium led by Atlantic Bridge Ventures. This transaction reflects LogicaCMG's strategic focus in developing as a major international IT and business services company.
Highlights of the transaction are as follows:
LogicaCMG to receive ‚£265 million (or approximately ¢â€š¬392 million) in cash proceeds from the consortium led by Atlantic Bridge on completion of the transaction, which represents 11.5x 2005 EBITDA
LogicaCMG expects to return approximately ‚£130 million of net proceeds to shareholders via a share buyback programme in 2007
LogicaCMG plans to use the remaining net proceeds to reduce debt and to fund the buy-out of some existing minority interests
A loan of ‚£15 million, representing the cash in the Business on 31 December 2006, will be provided to the Business from LogicaCMG to fund working capital, repayable after two years
LogicaCMG will provide transition services through 2007 to support the operation of the Business
The combined effect of the disposal and share buyback is expected to be earnings neutral in 2007
Completion of the transaction is expected following employee consultations and regulatory approvals
LogicaCMG has built a leading position as a European IT and business services company with a strong international network. The company provides business consulting, systems integration and IT and business process outsourcing across diverse markets including Financial Services, Energy and Utilities, Industry, Distribution and Transport (IDT), Telecoms and Media and the Public Sector.
LogicaCMG will continue to provide a full IT and business services offering to its telecoms clients worldwide including consultancy, design, systems integration, applications management, testing and outsourcing.
Commenting on the transaction, Martin Read, Chief executive of LogicaCMG, said:
"Over the last two years, we have significantly improved the profitability of the Telecoms Products business and developed a new product range. We have now secured an attractive sale price for the strengthened business. This divestment allows LogicaCMG to focus on its core strengths in IT and business services, using its industry and domain expertise and its strong business and technology insight to enable its customers to become more productive."
Overview of the Business
Telecoms Products is a leading provider of converged mobile messaging (SMS, multimedia messaging and voicemail services) and payments solutions to service providers and telecoms operators worldwide. In 2005, SMS solutions represented approximately 60% of revenue. On a constant currency basis, the revenue of Telecoms Products in 2006 was broadly stable compared to last year. Currency fluctuations will reduce reported revenue for 2006.
Telecoms Products generated total adjusted EBITDA1 of ‚£23.0 million and adjusted operating profit of ‚£13.9 million in 2005. In 2006, operating profit improved marginally due to continued cost management and a favourable revenue mix with a higher proportion of licence revenue.
Telecoms Products employs approximately 1700 people across 22 countries. Most of these employees, including the current management team, are expected to transfer with the Business.
As at 31 December 2005, the value of the gross assets being disposed was ‚£224.9 million (¢â€š¬337.4 million). A loan of ‚£15 million, representing the cash in the Business on 31 December 2006, will be provided to the Business from LogicaCMG to fund working capital. The loan will be repayable after two years and will bear interest on a commercial basis after the first six months.
Tax on the disposal is expected to be approximately ‚£10 million.
Further details
LogicaCMG will be hosting a webcast presentation for analysts and investors at 1:00pm UK time today which can be accessed at www.LogicaCMG.com. Analysts and investors wishing to ask questions should contact Brunswick for dial-in details.
An interview with LogicaCMG's Chief executive, Dr. Martin Read, will shortly be available for viewing at www.logicacmg.com.
For further information:
LogicaCMG Media relations
Carolyn Esser/Louise Fisk +44 (0) 20 7446 1786 (mobile: +44 (0) 7841 602391)
LogicaCMG Investor relations
Karen Keyes/Frances Gibbons +44 (0) 20 7446 4341 (mobile: +44 (0) 7801 723682)
Brunswick
Tom Buchanan +44 (0) 20 7404 5959
Notes to Editors
About Atlantic Bridge
Atlantic Bridge is a multi-stage technology private equity fund, with offices in Dublin and London and focused on the telecoms infrastructure, semi conductor and software markets. Atlantic Bridge brings together one of the strongest technology investment teams in the market with first hand experience of the challenges involved in growing technology companies and helping them achieve global scale and profitability.
Atlantic Bridge is supported by two major institutional investors:
* Access Industries is a privately held, US-based industrial holding company founded by American industrialist Len Blavatnik in 1986. The Access portfolio of investments includes Basell Holdings B.V. (the world leader in polyolefins production and technology), TNK-BP (Russia's third largest oil company), Siberian Urals Aluminum Company (SUAL); and Warner Music Group (the global music company). * International Investment & Underwriting (IIU) is a Dermot Desmond private equity vehicle with principal investments in Europe and the US.
About LogicaCMG
LogicaCMG is a major international force in IT and business services. It employs around 40,000 people across 41 countries. LogicaCMG's focus is on enabling its customers to build and maintain leadership positions using LogicaCMG's deep industry knowledge and its track record for successful delivery. The company provides business consulting, systems integration and IT and business process outsourcing across diverse markets including telecoms and media, financial services, energy and utilities, industry, distribution and transport and the public sector. Headquartered in Europe, LogicaCMG is listed on the London Stock Exchange, Euronext (Amsterdam) and is traded on the Xternal list on the Nordic Stock Exchange . More information is available at www.LogicaCMG.com
Based on a rate of ‚£/¢â€š¬ of 1.48.
Adjusted operating profit measures exclude, whenever such items occur, the results from discontinued operations, exceptional items and amortisation of those intangible assets initially recognised at fair value in a business combination.
Telecoms products segment assets at 31 December 2005 as per 2005 Annual Report.
LOGICACMG PLCRelated Shares:
LOG.L