Logica to grab US telecoms specialist

Software Carnegie Group board recommends offer acceptance.

UK information technology group Logica has entered into a definitive agreement to buy Carnegie Group, a provider of systems in customer management and decision support systems, for $35 million.

Founded in 1983 at Carnegie Mellon University and headquartered in Pittsburgh, Pennsylvania, Carnegie Group has 300 staff at seven US locations. The company generates most of its revenue from telecommunications operators.

Key customers include US West Communications, Bell South Telecommunications and First USA Bank. In the decision support area, accounting for 25 per cent of the business, key customers include the US Army, Darpa and the US Air Force.

For the year ended 31 December 1997, Carnegie Group earned revenue of $29.4 million, with pre-tax profit of $200,000. Net assets were $24.1 million.

For the half-year to 30 June, Carnegie Group's unaudited results had $16.2 million revenue and pre-tax profit and acquisition-related write-off of $600,000. Logica will pay $5 per common share in cash for Carnegie, a deal it will finance by US bank borrowings.

Mario Anid, Logica's corporate development director, said: 'We have been seeking to expand our business in North America and are pleased to have attracted a company specialising in an exciting, high-growth segment of our market.'

While the purchase is not expected to have a material effect on Logica's earnings in 1998/99, it was expected to enhance Logica's earnings the following year.

Carnegie Group's board of directors have agreed to recommend acceptance of the offer to its shareholders and will be accepting the offer in respect of their own shareholdings.

Following the issue of the tender offer document, Carnegie Group's shareholders will have a minimum of 20 business days to tender their shares.

The offer will be conditional on Logica achieving over 50 per cent acceptance and other customary closing conditions.