UK IT services firm acquires Managed Services Provider

In a transaction that occured overseas with ramifications for the managed services industry, Capita, a U.K.-based IT services provider plans to acquire the managed services business from NorthGate Information Solutions.

The deal is expected to settle in around £65 million after some taxes are paid. This comprises £22 million payable in cash consideration and, in addition, the assumption by Capita of a pension deficit of £17m net of tax relief (£21m gross) and finance leases for equipment used in the business of £26 million.

NorthgateArinso (NGA), the global HR technology and services provider, and Northgate Public Services, the software and services provider for Public Sector, are excluded from the transaction.

Northgate Managed Services provides cloud-based, infrastructure solutions and specialist managed services to public, private and third sector businesses. NMS made a pro forma operating profit for its financial year to 30 April 2012 of £10 million on a turnover of £141.6 million. Headquartered in Newtownabbey in Northern Ireland, NMS has approximately 1,000 employees and a local IT services delivery centre.

Adel Al Saleh, Group Chief Executive of Northgate said the company’s managed services has achieved significant new business wins over the last few years. The decision to sell NMS to Capita is the right strategic decision for both NMS customers and employees. Northgate Information Solutions will continue to build on the leading positions in Human Resources technology solutions and services, and Public Sector software solutions and technology services. NorthGate is well positioned to continue to grow NorthgateArinso (NGA) and Northgate Public Services.

Meanwhile, Paul Pindar, Chief Executive of Capita said as the pressure mounts for businesses to gain efficiency, technology has a growing role to play. By combining NMS’s managed IT services with Capita’s complementary business process and IT outsourcing capabilities, Capita will enhance its offering to clients and enable them to transform the way they do business.