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Author: Katharina Grimme
TietoEnator has announced its acquisition of SAP consultancy Topas Consulting in Germany, which has 74 staff, for €7.3m. Topas, which focuses on the energy/utility sector, had net revenues of €8.5m in 2005.
Comment: This is TietoEnator's second acquisition in Germany this year: it bought IT healthcare provider Waldbrenner in January 2006 (see EuroView Daily, 4 January). It seems that this strategy of niche acquisitions for vertical sector expertise and geographic expansion is becoming the preferred method for IT service providers wanting to strengthen their European footprint. Only two days ago, Capgemini announced its acquisition of FuE Future Engineering, which provides software development, CAD-modelling and consulting for the airline industry, notably Airbus. FuE has 250 staff and expected revenues of €26m this year.
We believe a niche acquisition strategy is wise to penetrate the German market, which is highly competitive for “generic” IT services. Small acquisitions that are easy to integrate and add specialist expertise as well as an existing customer base are a safe way to increase revenues while protecting profit margins.
We question whether Capgemini's acquisition will help its visibility in Germany, since FuE's only customer is Airbus, and the airline industry has not been a focus for Capgemini in the past. In contrast, TietoEnator's acquisitions, we believe, make good sense.
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