In early November, I wrote about a major deal in the information technology (IT) services market: Cap Gemini SA's $1.25 billion purchase of Kanbay International. As I pondered who might be next, I thought a good prospect would be Keane
Keane's buyer is Caritor, a privately held company that is actually believed to be much smaller (revenues are rumored to be $110 million or so). To help finance the deal, Citigroup's
The new company -- which will be called Keane -- will have about $1 billion in revenues and 14,000 employees. Essentially, Caritor has a good offshore capability, whereas Keane's core strength is in North America.
I interviewed Brad Adams, who is a managing director at Boston Corporate Finance and has long considered Keane a buyout candidate. According to him, "Keane can leverage Caritor's global delivery capabilities with its domestic customers. Caritor will greatly enhance its presence here in the U.S. Overall, we believe that this acquisition is a very good strategic fit."
The valuation looks reasonable, too. It's about 0.9 times estimated 2006 revenues and 12.9 times estimated 2006 EBITDA. However, if Keane had a strong offshore capability - as was the case with Kanbay -- the valuation would have likely been much higher (Kanbay sold at 3.3 times revenues).
OK, OK. You want another takeover candidate?
Of course, I don't have a crystal ball. But a company I do think is attractive is Perot Systems
Whether Perot Systems gets a buyout offer is really just speculation. But the good news is that deals like the purchase of Keane do show that the "smart money" definitely sees opportunity in IT services.
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