French integrator Sopra and European developer Steria have agreed on a merger, which will create a major player with a combined revenue of €3.1bn and operations in 24 countries, employing 35,000 in Europe and Asia.
In terms of business activities and geographic segments, the fit between the two entities gives it a large organisation in France from Sopra with experience in banking, human resources and real estate products and its effective application management model. For its part, Steria brings its international reach (Europe and Asia) with a position in the United Kingdom, a pertinent offering in Business Process Services and its expertise in IT infrastructure management.
Industrial-scale production capacity would be significantly reinforced with an array of offshore and nearshore service centres representing a workforce of approximately 8,000 people, including over 6,000 in India.
Reinforcing competitive positioning and the complementary fit of offerings and geographic locations could lead to faster revenue growth, it says. For example, Sopra would be able to benefit from the European positions of Steria to accelerate the commercialisation and rollout of its software solutions; for its part, Steria would be able to leverage Sopra’s offshore capacity in India for its French clients. The proposed tie-up should also generate annual operational cost synergies of €62m commencing in 2017. The transaction is expected to have a neutral effect on basic earnings per share in 2015 and be strongly earnings enhancing as of 2016.
The ambition is to form a group that is capable of generating strong organic growth with the objective of achieving revenue of over €4bn and progressively improve the operating margin on business activity to approach the 10% mark.