RealTime IT News

Sema, LHS Merger Aims To Become Mobile Software Giant

Europe's second largest IT services company Sema Group plc and software developer LHS Group Inc. Wednesday announced a merger of the two firms that aims to capture a piece of the mobile e-commerce pie.

Under the terms of the deal, LHS shareholders will get 27 per cent of the combined group, receiving 2.6 new Sema ordinary shares for each LHS share valued at $69.7. This puts a total valuation of $4.7 billion on LHS.

When the merger is completed in the second half of 2000, the enlarged company will have -- in the mobile telecoms sector alone -- 2,600 employees, 350 customer sites worldwide, 140 million subscribers, and $400 million of revenues.

The group will be listed London, Paris and on Nasdaq, but not on the Neuer Markt where LHS is currently listed.

Pierre Bonelli, chief executive of Sema, explained the rationale of the merger in simple terms, saying the ultimate prize for a technology company is market share.

"The combination will assist us in achieving our stated telecoms strategy of becoming the worldwide leader in customer care and billing, prepaid, messaging, value-added services and mobile commerce," said Bonelli.

Gary Cuccio, chief executive of LHS, said that as a result of the merger the company will also be extremely well positioned to capitalize on the wireless Internet market by leveraging its global customer base.

The merger still requires a formal vote by LHS shareholders, but it is said to have the support of major shareholder General Atlantic Partners, and of Chairman Hartmut Lademacher who was one of the original founders of LHS.

Sema has an option to subscribe for new shares in LHS representing up to 17.5 per cent of its existing capital. Major existing shareholders in LHS will retain their investment in the company.

Both Hartmut Lademacher and LHS Director George Schmitt will join the board of Sema as non-executive directors.

Although its registered office is in London, Sema has much of its management and operations in France, and a pre-merger total of 20,200 employees in 25 countries. It currently derives 88 per cent of its revenues ($2.23 billion in 1999) from western Europe.