Northgate switches from hunted to hunter

Bullish VAR makes second major acquisition in the space of a week

VAR Northgate Information Solutions has had one of the busiest weeks in its history as it announced two big-ticket acquisitions and a trading update.

Only last Autumn, Northgate was in talks with third parties with a view to selling the business. But in a dramatic u-turn, the VAR has transformed itself from potential prey into an aggressive predator (CRN, 27 October).

While the market was still digesting news of its bid for European human resources (HR) outsourcing giant Arinso, Northgate stunned onlookers by announcing it had also snapped up management consultancy Kendric Ash.

Northgate will pay up to £14.2m for public sector specialist Kendric, which focuses on boosting the performance and processes of local government clients. Following an initial payment of £9.2m, the VAR has agreed to cough up a deferred payment of £0.5m, and will shell out a further £4.5m based on performance targets.

Kendric, however, is small fry compared to Arinso, which boasts 2,500 staff and operations in 27 countries.

Northgate has agreed to buy a 60.43 per cent stake in the Euronext Brussels-listed firm for a whopping €228.4m. A specialist in SAP-based HR services and solutions, Arinso claims to work with five of the world’s 500 largest firms.

But although keen to splash its cash, Northgate endured mixed fortunes in its financial year to 30 April.

The VAR said its human resources and managed services arms had both registered a strong performance. But Northgate admitted its public services division had been hit by “challenging” conditions in the criminal justice sector due to deferred and cancelled projects at the Home Office.