KPMG sells off European consulting units

May and June 2002 saw a host of acquisitions in the IT services market. In particular, as professional services firms continued to separate their auditing and consulting businesses, the largest deals in the period involved the sale of KPMG International‘s various European consulting businesses.

In 2001, the US consulting business of professional services firm KPMG International was spun out to form KPMG Consulting, but the new company did not


Novell moves into web services with SilverStream

Troubled networking software and services company Novell, best known for its NetWare network operating system, announced the acquisition of application server and web services tools company SilverStream for $212 million (€225m) in June 2002.

The acquisition is part of Novell’s plan to become a leading force in the commercialisation of web services technologies. The company has recently positioned its directory software as a means of connecting web services and has made it the foundation of its new ‘one Net’ product line.

SilverStream supplies graphical tools for building applications based on components. Its initial focus was on Java objects, but it has recently concentrated more directly on the web services opportunity.

Novell now has application development tools, a network directory and, with Novell’s Cambridge Technology Partner’s acquisition, a substantial services business. However, analysts are concerned that the company still lacks the scale and momentum of other web services hopefuls, which include Microsoft, Oracle and IBM.



encompass any of KPMG International’s European divisions — until now.

For $685 million, KPMG Consulting has bought KPMG International’s consulting practices in Germany, Switzerland and Austria. With 3,200 employees and 2001 revenues of $540 million, these practices are expected to give KPMG Consulting a significant international boost.

However, KPMG Consulting missed out on the chance to buy KPMG International’s consulting operations in the UK and the Netherlands. These were sold to Franco-Dutch IT services company Atos Origin for €657 million. The two practices have combined annual sales of €600 million, and a combined headcount of 2,800 employees. For Atos Origin, the deal provides wider geographic reach, more than doubling its business in the UK and transforming it into the largest IT services company in the Netherlands. It also boosts Atos Origin’s consultancy practice, which will now account for approximately 18% of its overall business, up from 2%.

In the US, PC maker Dell Computer has bought Plural, an IT services company with 200 employees, for an undisclosed amount. Privately held Plural counts Microsoft among its investors, and has a particular focus on application development, integration and deployment in the Microsoft environment.

Dell has been talking about strengthening its services business, which generated revenues of $2.5 billion in 2001, for some years. In a market where profit margins on commodity hardware such as PCs are continually squeezed, IT services and consulting have become vital businesses for hardware companies.

To strengthen its services arm, Dell poached Jeff Lynn from Compaq’s services business in 2001 to take over as its vice president of professional services. In the short term, Plural will operate as an independent unit within Dell. But if Dell is really serious about boosting its services business, it will need to make a lot more acquisitions in this area.

Recent IT services deals
Acquirer   Activity   HQ   Target   Activity   HQ   Price  
Atos Origin IT services France KPN SoftwareHuis KPN’s s/w svcs arm NL n/a
Atos Origin IT services France KPMG Int’l (consulting units) Dutch &UK consulting units n/a EU657.0m
Avasta Apps mgmt services US siteRock Remote perf mgmt svcs US n/a
Dell PCs &servers US Plural IT svcs US n/a
EDS IT services US Loudcloud (unit of) Mgd hosting bus US $63.5m
GFI Informatique IT services France Thales Information Systems IT svcs arm of engineer Thales FR EU340.0m
KPMG Consulting IT services US KPMG Int’l (consulting units) Germ, Swiss &Austrian units n/a $685.0m
TietoEnator IT services Finland Hewlett-Packard (unit of) Compaq healthcare tech bus Finland n/a

Other major deals
Acquirer   Activity   HQ   Target   Activity   HQ   Price  
Advent Software Investment mgmt s/w US Techfi Financial svcs s/w US $23.0m
Ascent Technology Management buyout UK Ascent Technology CRM s/w &svcs UK EU23.5m
Borland Application dev s/w US Highlander Engineering Embedded sys s/w US $2.0m
Exact Holding Mid-mkt bus apps Neth Kewill (ERP unit) ERP s/w div of Kewill Sys UK EU20.5m
Exigen BPO services US Portera (PSA unit) PSA bus of web svcs co US n/a
Finmatica Ebusiness s/w Italy Mercia Group Demand &SCM apps UK EU20.1m
Hitachi Electronics Japan IBM’s HDD unit Hard disk drive business US $2.0bn
IBM Systems, software &svcs US Metamerge Directory integration s/w NW n/a
Intuit Personal finance s/w US Management Reports Bus mgmt s/w US $92.0m
iSoft Healthcare sys &s/w UK Northgate Information Sols Healthcare bus UK EU51.6m
Juniper Networks Networking equip US Unisphere Networks Ntwkg equip div of Siemens G/US EU784.7m
Manugistics Supply chain mgmt s/w US Digital Freight Collaborative logistics s/w US n/a
Micromuse Ntwk mgmt s/w US RiverSoft Ntwk mgmt s/w UK EU67.1m
MRO Software Asset mgmt s/w US MainControl IT asset mgmt s/w US $19.0m
Novell Networking s/w &svcs US SilverStream Web services tools US $212.0m

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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