10 August 2004 Hewlett-Packard, the world’s second largest computer maker, has announced plans to acquire UK-based computer services supplier Synstar for £163 million ($297 million).
The proposed acquisition is part of Hewlett-Packard’s strategy to increase its share of the IT services market – a strategy similar to IBM’s in the 1990s. At present, Hewlett-Packard (HP) lies fifth in the global IT services market behind IBM Global Services, EDS, Fujitsu and Computer Services Corporation (CSC).
Synstar provides infrastructure and hardware support for large companies, but is most wanted for its disaster recovery practice. Last year, it posted its biggest profit since floating on the London Stock Exchange in February 1999.
Synstar and HP do not expect many redundancies to result from the takeover. However, the HP will be able add 1,500 customers to its payroll with the purchase, swelling the company’s services division where sales grew by 15% in the second quarter.
Analysts Ovum Holway had ear-marked Synstar as an acquisition candidate for some time, with UK-based rival Computacenter considered the most likely buyer. “Mid-sized” companies are really just not viable anymore in this part of the market,” commented Richard Holway.