GE Capital IT Solutions said it would pull off a couple of big European acquisitions this year. True to its word, the US-owned reseller made a start in the UK two weeks ago with Systems International (SI), the #45 million Brighton dealership (PC Dealer, 11 June).
GE has increased UK operations by over 60 per cent with its purchase of Systems International. It has also gained a clutch of big-name clients, including Sainsbury?s, Safeway, Co-op Insurance, and some of Legal & General. The company will fold SI into its existing UK subsidiary, inherited through last year?s acquisition of Ameridata Global, creating a combined operation of #110 million. This will make GE Capital the UK?s sixth or seventh largest corporate reseller.
But GE still has a long way to go before it becomes a serious competitor in the UK to Computacenter, which is on course for #1 billion of UK sales in 1997. Mike Norris, Computacenter CEO, is seriously relaxed about the GE purchase. ?GE is going to be a serious competitor ? but not yet,? he said.
?The only remarkable thing about the deal is how unremarkable it is. Systems International is in the second division, like Simmons Magee [now owned by Info Products], and these companies are going to get bought or relegated.?
John Trueman, MD of Info Products, added to the same theme, saying: ?I am slightly surprised about SI. I thought GE was in the market for bigger fish, but without a doubt we have got to take it seriously.? He added that GE would need to focus on integrating the two UK businesses.
But Michael Kianfar, managing director and founder of SI, maintains that integration was already well advanced. ?A lot of people are hoping that GE Capital will screw up on integration, but they will be disappointed. The way we are or- ganised fits GE?s corporate structure to a tee,? he said.
Brighton-based SI?s proximity to GE?s branch in Burgess Hill would also make integration easier, he said. No job losses are expected. Kianfar said he had rejected six other takeover proposals ? three from the UK, one from Europe and two from the US ? in the past year.
?The others were not very exciting to me. They were about winning some battles. The GE scenario was about winning the war,? he said. ?If you are going to stop playing with your own bat and ball, you should make sure you are playing with a really big bat and a really big ball.?
Kianfar will join GE?s European management team in Germany. At the same time, John Casson, a former Cabletron European director, is joining GE as UK managing di- rector. Casson will beef up GE?s UK geographic coverage and service business. He shares managing director responsibilities with Michael Brecht. GE is adopting the same management theme across Europe.
Last month, the company bought CPC Si, a Portugese reseller, which it merged into its local subsidiary. CPC Si owner Antonio Ferraira will become joint managing director with GE?s Portugese country director Jose Salgado Braz.
This acquisition was swiftly followed by GE?s purchase of Management Data Systemhaus last week. The $15 million operation will be merged with GE?s existing Austrain subsidiary, which it acquired from Ameridata. Management Data was owned by CA Austria which wanted to pull out of the dealership market. Management Data provides banking software and financial consultancy, employing 180 staff.
Kianfar foresees a future in which GE Capital IT Solutions in the UK could have up to 18 managing directors. ?This is a highly intellectual business, which is building an organisation for the 21st century. It is not the old command and control organisation.
?GE has implemented a phenomenal entrepreneurial model. It sets common themes and goals and then it gives responsibilities to managing directors for each particular segment. It lets you to go out and develop your business, without getting in your hair,? he said.
Kianfar will work on integrating GE?s operations and will also look to further acquisitions. Italy, France and the UK are top of GE?s wish list, according to a company representative.
In the meantime, Computacenter is making a modest international foray of its own. It has just bought Bitservice, a #15 million reseller in Frankfurt. This is small potatoes, but Computacenter needed a dot on the German map to fulfil international sales obligations.
ICG, the Computacenter-led consortium of international resellers, has been looking for a German partner ever since Compunet, the German member, was bought by GE last year.
The parting of the ways was inevitable, according to Martin Hellawell, managing director of Computacenter France. ?GE is a competitor of ICG worldwide and of Computacenter in the UK,? he said.
?There has been a hole in our coverage in Germany, but we are operating a sensible handshake agreement whereby we continue to work together in the medium term. In the long term, we are arch enemies.?
Computacenter will be keen to expand this operation, but it will be in less of a hurry than GE Capital.
From a standing start in 1996, GE Capital IT Solutions has built a $1 billion business in Europe, entirely through acquisition. It still has $300 or $400 million to go before it catches up with Computacenter, but there is little doubt that GE will become top dog in Europe. It may reach this target before the end of the year.
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