ICT: US and Canadian outfits dominated foreign acquisitions of European technology services firms last year, a consultancy has reported.
Three top markets accounted for nearly two-thirds of mergers and acquisitions activities in the European technology services sector last year, a paper by an international group of financial advisors has said.
Four out five foreign buyers were North American, while overall many European firms remained reliant on foreign staff, according to Globalscope, a network of boutique M&A consultancies that specialise in cross-border deals.
The European IT Services Industry 2013 report, which was released on Wednesday, covered 44 European states, focusing on technology service providers--including consultants who design IT systems, digital marketing agencies, and infrastructure such as data centres and web hosting--and not hardware and software vendors.
The group counted “298 transactions being closed in 2013” with 60% of the deals taking place in France, Germany and the UK.
Among “deals of particular interest” across Europe, the report cited India-based Tata Consultancy Services’ €75 million acquisition of French IT engineering concern Alti; French marketing giant Publicis’ €582 million pick-up of Dutch marketing agency LBi; and American data centre operator Digital Realty buying three sites from French carrier Bouygues Telecom for €60 million.
Grand Duchy deals
“We counted three major transactions in Luxembourg in the past year”, Daniel Schneider of M&A advisory firm Tenzing Partners, the group’s member in the Grand Duchy, said on Thursday. (He sits on the board of directors of the company that publishes Delano.)
“The deal value was not disclosed but the business consideration--long term contracts--could amount to several hundred million euros over the next few years,” Schneider said.
Earlier in the year, data centre operator DATA4 took on a 90% stake in SecureIT from venture capital firm Genii Capital, and this past January Luxembourg-based Euroscript bought Belgian content management provider Amplexor, which had turnover of €10.5 million in 2012, from Capricorn Venture Partners.
North America dominates
The report stated the US and Canada accounted for 80% of buyers from outside Europe. “Despite China’s growing economical power no acquisitions by Chinese companies have been observed in 2013.” However, Indian companies, which traditionally had focused their European investments in the UK, snapped up two German and one French IT engineering firm, Globalscope observed.
While there was no clear trend of foreign buyers entering the Grand Duchy last year, Schneider said that longer-term “we have witnessed US interest for Luxembourg-based companies”.
The report also cited the German IT services sector’s increased dependence on foreign workers from Poland and other Eastern European countries.
Facing a similar employee shortfall, “obviously, Luxembourg has to be open and pragmatic about the whole approach of work permit allocation as not all skills can be found locally or in the surrounding countries,” Schneider commented to Delano.