Merrill Lynch positive on Atos Origin/KPMG Consulting deal
The EUR657mn acquisition of KPMG Consulting by French IT services company Atos Origin has been viewed as a long term "Strong Buy" by Merrill Lynch.
The investment bank’s analyst Ariel Bauer believes that Atos Origin will strengthen its presence in the UK, which will add up to 15% of the company’s revenues. KPMG Consulting will account for 17% of Atos Origin’s revenues as a whole.
Bauer feels Atos Origin’s past record with integration will see it through any potential problems, but the process is likely to take 6-12 months.
The deal has cost Atos Origin 1.1x sales, which is in line with the industry average, and considerably lower than the price Cap Gemini paid for Ernst & Young’s consulting arm, which equated to around three times revenues. It also sees a lock-up agreement of four years for consulting partners and one year for audit partners.