Steria today announced that it plans to buy Xansa for 472 million in a deal that will result in multi-million pound savings and create an outsourcing giant capable of taking on some of the bigger players both onshore and offshore.
The French company says that the acquisition will make it a top 10 European services player and shave €24 million (16.2 million) from its overheads next year. Likewise, it hopes to reduce costs by €49 million (33.1 million) in 2009 and €53 million (35.8 million) from 2010 on, but these reductions will come at an initial hit of around €49 million (33.1 million) over two years.
Xansa currently boasts more than 8,000 employees, 5,000 of which are based in India. Steria will benefit from these skilled staff in addition to beefing up its public sector and financial services expertise through the purchase.
"This transaction constitutes a major step in the implementation of our strategic plan," said Franois Enaud, Steria's general manager and chief executive. "Focused on the fastest growing market segments, the new group will be one of the most attractive in the ITS sector, both through the value of its service offerings (Business Transformation and Business Operation) and its exceptional industrial delivery model. I am sure that such an alliance represents an exciting opportunity for all of our employees."
Analysts agreed that the move will strengthen Steria's standing in the UK.
Once the deal has gone through, the newly-bolstered Steria will jump from number 38 in the list of the UK's largest software and IT services (S/TIS) providers to number 15, according to Dominique Raviart, a senior analyst at Ovum.
"We think the timing of the operation is right. Xansa has a well-established offshore presence, and it now has a successful delivery model that blends onshore and offshore capability for its customers. The company has faced several years of flat growth and mid-digit operating margin..." he said.
