French IT services firm Sopra has agreed to buy-out rival Steria in a deal that will create a company with combined revenues of €3.1 billion (£2.5 billion).
The proposed ‘friendly tie-up’ aims to create a “European leader in digital services” with over 35,000 staff and operations in 24 countries.
The deal will see Sopra offering one share for four Steria shares, at an exchange value of €22, and could take place next month. A merger project is expected to begin by the end of the year.
“The idea of combining forces has always looked like it made sense,” said Pierre Pasquier, chairman and founder of Sopra, and Francois Enaud, CEO of Steria, in a joint statement. “The accelerating pace of the digital revolution and new modes of consuming services are giving rise to a deep-seated change in our market.”
The pair added that the alliance would create “one of the most complete portfolios of offerings available to the market”, centred around software solutions and business process execution.
Steria has a number of contracts in place in the UK, such as a £1 billion shared services contract with the Cabinet Office to deliver IT, HR and finance as part of the Independent Shared Service 2 (ISSC2) programme.
The deal will allow Sopra to leverage Steria’s stronger presence outside of France, commented Georgina O’Toole, research director, TechMarketView.
“We can see, in particular, that Sopra will be offered the chance to accelerate the rollout of its solutions – real estate, banking and HR – into other geographies, as well as expand them into BPS offerings; a Steria strength,” said O’Toole.
“Steria will benefit from Sopra’s experience as it tries to identify its portfolio of solutions, something it has never really got a handle on. As is always the case though, it will all come down to execution.”