Monday, 27 October 2008

Northgate to complete Anite PS take over

Today’s announcement by the Office of Fair Trading that Northgate’s acquisition will not be referred to the Competition Commission (see here for Anite RNS), should mean that Northgate’s take-over of Anite’s Public Sector division will now go through.

Anite’s investment in the Public Sector came in the form of the multiple acquisitions of independent companies (like Sheridan, BCT, Imasys, MPS) and businesses from larger players (like ICL and Bull). Being ungenerous, most had problems at the time they were acquired, and those that didn’t have problems seemed to have reached their peak at the time of acquisition - and Anite paid top prices for businesses that were just going ex-growth.

In the beginning, Anite appeared to have a strategy of bringing the products together with common technical infrastructures and/or appearance, a strategy that it quickly realised would be vastly expensive, and not necessarily of benefit to its sales. I remember a discussion with APS’ senior management back in 2001, when they already doubted the wisdom of bringing the product sets together. But ultimately I believe that the demise of the Public Sector unit was driven by its disastrous State of Victoria project, and multiple problems with the Pericles revenues & benefits product acquired from ICL in 2001.

Anite never really achieved a target of becoming the top supplier in its chosen markets in the Public Sector – Pericles was always number 4 (behind Northgate/ Sx3, Capita and IBS), ITS/Paris was always number 3 (behind Capita/Academy and Civica/Radius), Housing Management was number 5 (behind Northgate/Sx3, Orchard, Capita/IBS and Civica/Comino) – only Sheridan and Imasys seemed to be towards the number one spot in Social Services and Document Management respectively. Anite’s Police and security businesses were well regarded, but if rumours coming out of Anite are to be believed, more problem projects in those areas meant that true profitability was low, and in some cases non-existent.

What will Northgate do with the acquired businesses? I believe that Northgate is an altogether better managed organisation, and on the basis that they have completed a good due diligence phase and understand what they’ve purchased, I would expect to see most of the main units thriving within Northgate. As with all such acquisitions, there is bound to be some fall-out in the early days, but Northgate has considerable experience of such acquisitions and I’m confident will provide some stability to a previously rocky business.

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