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WM-data and Novo: finishing off the competition

Switching horses

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Stockholm based WM-data has offered to pay €200 million in cash and shares to acquire Finnish IT services group Novo, compared to SysOpen's €155 million offer. WM-data will offer €2.5 in cash and 1.5 new shares for each Novo share, or a total cash option of E5 per share up to a total of 10,000 shares, which values Novo at a premium of 42 per cent above the company's closing share price on September 24, the day before SysOpen made its own public offer.

The combined WM-data/Novo business would have combined pro forma net sales of €1.08 billion in 2002, and a workforce of 8,482 people. The now-terminated Novo/SysOpen deal would have created a much smaller firm with revenue of €338 million in full-year 2002, and 2,661 employees.

More importantly, the Novo deal would significantly boost WM-data's presence in Finland, where it currently makes just 10% of its revenue or around €73.2 million. Novo, meanwhile, makes the majority of its €308.5 million revenue here.

Should the deal go ahead, Novo will be merged into WM-data's existing Finnish operation and be rebranded WM-data Novo. Finland is also the home of WM-data's biggest Nordic rival TieotEnator, which ranks as the largest player in the market with revenue of €1.3 billion in 2002, and the new scale will enable WM-data to compete on a more level footing.

The deal would give WM-data a sizable presence in all four of the major Nordic markets - Sweden, Norway, Denmark and Finland. This would enable it to pull away from mid-sized rivals EDB Business Partner and Ementor, and give it greater potential to compete against global players such as IBM and HP, which have recently won major outsourcing deals in the region.

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