Updated: Fujitsu buys Kaz

Fujitsu has acquired Telstra (ASX: TLS) IT services subsidiary, Kaz Group, for $200 million.

In a statement, Fujitsu said the deal would expand its customer base, skills and national footprint and make it Australia’s third-largest IT company by revenue. Combined, the pair will have nearly 5000 staff.

The acquisition was in line with Fujitsu’s long-term objectives to grow its Australian business and provide broader consulting, application and infrastructure services, Fujitsu corporate first senior vice-president and president of global business, Richard Christou, said in a statement.

Rumours of Fujitsu’s intentions to acquire Kaz have been circulating for over six months. Last August, sources told ARN the pair had been unable to come to an agreement over the purchase price or terms and conditions.

In an interview with ARN, Australian CEO, Rod Vawdrey said Kaz delivered broader skills particularly around service-oriented architecture (SOA), which was gaining popularity within Fujitsu’s SAP customer base. Both organisations also partner with Microsoft and Cisco.

“This is significant because it gives us complementary capabilities around geography and customers,” he said. “It’s amazing how well it fits together – we’ll have 5000 people and be able to compete with the big boys in all segments.

“Many of Kaz’s council and government customers are different to ours, which means we’ll have a wider customer set. Also, with a number of customers, they’re providing one service, while we are doing the other – for example, applications and infrastructure. This allows us to call more customers and maintain deeper relationships.”

Vawdrey denied the economic downturn would hinder the acquisition’s success or the combined group’s long-term growth. He added there were no plans to cut headcount.

“Good companies in turbulent times need to be focused on core business. Our core business is end-to-end IT services. By expanding our business in those core areas, we are about being more competitive and offering more capability,” he said. “We are in good shape and are taking on a good business – we will be more competitive through scale, and be in a position to take advantage when the recovery happens.

“We are finding that services are faring fairly well. Customers are stretching the life of hardware, but services are holding up.”

Telstra enterprise and government group management director, David Thodey, said the telco no longer considered ownership of an IT services business as core to its strategy.

“Telstra will continue to deliver centralised network services to our customers through our network enterprise services business,” he said in the statement. “However, we will also continue to look for opportunities to work with Fujitsu in the delivery of IT services.”

Fujitsu and Telstra will continue to work together as part of a strategic alliance, Vawdrey said. He cited unified communications and virtualisation deployments as areas of opportunity.

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