TietoEnator has sold its government business operations in Sweden, Denmark and Norway to Sirius IT, a company established jointly by the Icelandic telecommunication company Síminn and the Danish management of TietoEnator Government Services.
The decision supports TietoEnator's strategy to focus on improving organic growth and profit in regional verticals and internationalization in selected vertical businesses. TietoEnator's global spearhead areas are banking, forest, healthcare and telecom.
In the government market TietoEnator's strategy is to focus on partnerships and high-value-added IT service offerings mainly to central government customers in Finland. In countries outside Finland, the Government Services business units are in the building up phase of partnership development. Enlarging this business would require investments which do not support TietoEnator's overall strategy.
The main business activities in the divested units are consultancy, solutions and application management to both the governmental sector and selected private companies. The business employs approx. 420 people; 140 in each of the three countries. The half-year net sales of the divested business in 2006 were EUR 31.8 million and operating profit EUR 1.4 million. The transaction will have a positive impact on the operating margin of TietoEnator's Government, Manufacturing & Retail business area.
The transaction is based on the enterprise value of EUR 26.4 million and the capital gain at the closing date is expected to be about EUR 9 million. There still exist some negotiation issues to be finalised regarding the transaction. The closing of the transaction is expected to take place on 1 November 2006.
TietoEnator President and CEO Pentti Heikkinen said: "Looking for a new owner for our Danish, Swedish and Norwegian government businesses has been one step in our strategy execution. Releasing these resources enables us to sharpen our focus and make further internationalization investments within chosen industry areas and global solutions."
Sirius IT has been established by the Icelandic telecommunication company Síminn (Iceland Telecom) and the management of TietoEnator Government Services Denmark. The new ow owner is expected to offer the units greater scope to develop their business. Kim Winther Jensen has been appointed the managing director of Sirius IT.
Kim Winther Jensen, CEO of Sirius IT, said: "Our vision is to create a solid Nordic-based IT service company with a strong foothold in the public sector and selected businesses. Over the years we have developed good relations with both public organizations and selected private companies in Denmark, Norway and Sweden. We will continue all central business operations and seek to combine the experience and professionalism of a large company with the agility of the smaller company."
Hreinn Jakobsson, CEO of Anza IT of Síminn, said: "This investment is in line with our strategy to grow our business in the field of information technology. Experienced employees and strong customer relations based on deep domain knowledge make Sirius IT a good starting point to establish ourselves as an essential player in the Nordic IT market."
TietoEnator government business strong in Finland
In Finland TietoEnator is the market leader in the government business with 40 years of experience and long customer relationships. TietoEnator's government resources are now focused on the needs of Finnish customers, supporting them in their digitalization processes. The target is to combine all TietoEnator expertise to be able to provide Finnish government customers with a full service offering, innovations and best practices.
The government business transaction does not concern other TietoEnator business areas. Processing & Network and Healthcare & Welfare continue to serve their central and local government customers in all the markets in which they operate.