The $US2 billion bid by Dutch computer services company Getronics for Wang Global still has several hurdles to clear before it can go ahead, company management acknowledged at a press conference here yesterday.
The deal still needs approval by US and European regulatory bodies, and may also require the cooperation of Olivetti SpA, which retains a 20 per cent stake in Wang Global. The deal also depends on Getronics being able to acquire at least 51 per cent of the Wang Global stock.
Getronics' chief executive officer, Cees van Luijk said the bid was a friendly one and had been welcomed by the Wang Global board. But he could not say if the two Olivetti representatives who sit on the Wang Global board were in favour of the deal.
"We expect to meet with Olivetti quite soon," he said.
Another unanswered question concerns future branding of Getronics activities around the world. Van Luijk said he wanted to brand all services under the Getronics label but said the company had not formed a strategy for moving from the existing Wang and Olsy brands that already exist within Wang Global.
If the deal goes ahead, Van Luijk said he expected it to take between 18 months and two years to integrate the operations of the two companies.
Acquiring Wang Global will give Getronics, whose main business is in systems integration and consulting, an instant presence in international markets - such as the US and the Far East -- where it has had none up to now.
The company employs 12,500 people, but still does three-quarters of its business in Holland and Belgium, much of it in the government sector. The company is also strong in Norway, Denmark and Spain, but has little presence elsewhere.
Chief financial officer Jan Docter said Getronics has been looking for some time for an international services company to acquire. "We had been looking at Olsy (formerly owned by Olivetti SpA) but Wang got there before us," he said.
Wang took over services company Olsy in March 1998, creating a global company with annual sales of $3 billion, and broad geographical coverage. In calendar year 1998, the company derived 53 per cent of its business from Europe, 36 per cent from North and South America, and 11 per cent from Asia Pacific.
Because there is so little overlap in the geographical coverage of the two companies, Van Luijk said there would be little restructuring to do to create an integrated operation.
Getronics plans to make a public tender offer for Wang Global stock on May 10, and anticipates it closing by June 7. The offer price is $29.25 - a 30 per cent premium over the prevailing stock price, Van Luijk said.
If the deal goes through, it will create a services company with annual sales of nearly $5 billion and 33,000 employees, operating in 40 countries, specialising in desktop and network services. This will put it among the top three in Europe and the top five in the world, Van Luijk said.
But the main challenge, as he admitted, is to raise the margins earned in the Wang Global side of the business. Getronics is used to earning margins of around 18 per cent, while Wang Global was at around 6 per cent last year, before tax, interest and depreciation were deducted.