Birmingham-based IT outsourcing vendor, ITNet, looks set to be bought by Serco Group in a deal worth £235 million.
Rumours of a sale have been circulating around ITNet for some time. Directors admitted last month that they were in discussions, and have now confirmed that they will recommend shareholders accept a £235 million offer from business support company Serco.
ITNet was spun out of Cadbury Schweppes in 1995, following a management buyout. But recently it has sailed into troubled waters. In June it posted losses of £24 million, following the loss of a high profile £83 million contract to host the Cabinet Office data centre.
The takeover will allow Serco, currently specialising in the defence, health, justice and transport sectors, to add ITNet’s infrastructure management services to its portfolio and to compete for higher value contracts both in the UK and abroad.
Serco predicts that the ITNet purchase will result in cost savings of £5 million in 2007. “ITNet is a strong fit with Serco, both in terms of complementary skills and customer bases,” said Serco’s executive chairman Kevin Beeston.
Serco is also set to acquire RCI, the US government IT contractor which offers consulting and systems engineering, for £113 million cash. Serco says both acquisitions will enhance earnings in 2005 and aims to complete both deals by mid-March 2005.