(AOF) – Sopra Steria, one of the European leaders in Tech, recognized for its consulting, digital services and software publishing activities, announces that it has signed an acquisition agreement with a view to acquiring all CS Group shares, held by Yazid Sabeg, Chairman of the Board of Directors and Eric Blanc-Garin, Chief Executive Officer, and their joint holding Duna & Cie representing approximately 29.73% of CS Group’s capital, for a price of 11, 50 euros per share.
This agreement is concluded following the entry into exclusive negotiations announced on July 28, 2022 and the information-consultation procedures of the respective employee representative bodies of Sopra Steria and CS Group. It supplements the sale agreements already granted on July 27, 2022 by Cira Holding and the founders of Novidy’s to Sopra Steria relating respectively to approximately 29.15% and 6.38% of the company’s capital (“other blocks”) for a price per share equal to that of the main block. Following the acquisition of the main block and the other blocks (the “transaction”) and taking into account the 9.80% already held, Sopra Steria will hold 75.06% of the capital of CS Group.
The completion of the transaction, which could take place during the first quarter of 2023, remains subject to the usual conditions precedent, in particular with regard to merger control and control of foreign investments.
Following the transfer of the main block and the other blocks, Sopra Steria will file a draft simplified mandatory public purchase offer for the balance of the capital and securities giving access to CS Group’s capital or voting rights at the same price of 11.50 euros per ordinary share (the “offer”).
In the event that the threshold allowing the completion of a squeeze-out is crossed at the end of the offer, Sopra Steria intends to request the implementation of a squeeze-out procedure for CS Group shares. under the conditions required by the applicable regulations.
Sopra Steria also specifies that the Board of Directors of CS Group decided on July 27, 2022, on the recommendation of an ad hoc committee set up for this purpose, to appoint Finexsi, represented by Mr Olivier Peronnet, as expert independent responsible for drawing up a report on the financial conditions of the offer and of a possible squeeze-out and presenting its conclusions in the form of a fairness opinion.
The Board of Directors of CS Group will decide on the interest of the offer and on its consequences for CS Group, its shareholders and its employees, in view in particular of the conclusions of the independent expert’s report.
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Key points
– One of the 5 European leaders in digital transformation born from the merger in 2014 of Sopra and Steria;
– Company organized into 4 businesses generating €4.3 billion in revenue: systems consulting and integration (61%), solution publishing (15%), business process services (15%) and infrastructure and cloud (19%);
– European presence, in France (48% of revenues), in the United Kingdom (13%), the other Europe division with strong positions in Germany (31%) and the rest of the world;
– Business model: to be, in Europe, the strategic partner of major administrations,
financial and industrial operators and strategic companies by supporting them in their digital transformation and preserving their digital independence;
– Shareholders’ agreement between the founding families Odin and Pasquier and the managers, i.e. 22.3% of the capital and 33.6% of the voting rights, ahead of the employees (4.8% and 7.8%), Pierre Pasquier chairing the 15-member board of directors and Cyril Malargé being general manager;
– Healthy balance sheet with debt reduced to €345m compared to €1.8bn in shareholders’ equity at the end of June.
Challenges
– Strategy based on a strong positioning in Europe, on the development of solutions (target of 20% of revenues in the publishing and integration of solutions), on consulting (target of 15% of revenues), the integration of medium-term and aiming for medium-term annual revenue growth of between 4% and 6%, an operating margin of 10% and free cash flow of between 5% and 7% of revenue;
– Innovation strategy:
-monitoring technologies and their uses ensured by the Digital Champions, innovation missions given to project teams, hackathons open to customers and partners, demonstration, ideation and codesign spaces,
– targeted partnerships (startups, universities, research laboratories, major publishers such as Axway and GAFAM, Campus Cyber France)
– entry into the capital of start-ups, particularly in cybersecurity;
– implementation of 2 development platforms, one for the cloud, the other for blockchain, artificial intelligence and machine learning;
– Environmental strategy with the objective of zero net GHG emissions in 2028:
– 3 stages: zero net emissions for direct activities at the end of 2022, for indirect activities (waste, journeys) at the end of 2025 and purchases of goods and services at the end of 2028,
– support for customers in their low-carbon transition;
– Strong positioning in “cloud computing” (cloud computing), big data (management of data volumes) particularly in defence, the public sector and aeronautics;-
– Acceleration in artificial intelligence: partnership with OVH Cloud, participation in the Confiance.ai collective, etc.;
– High visibility with the recurrence of turnover (more than 40%).
=/ Challenges /=
– Towards a takeover bid, in the 1st quarter of 2023, on CS Group, which will strengthen the digital services and critical systems business for defense & security, space and nuclear and will be accretive to earnings per share from the 1st year;
– Disposal of the 32% stake in Axway, i.e. a negative impact of €25 million before tax;
– After a 7.7 increase in revenues at the end of September, raising of the 2022 objectives: growth in turnover of 7%, operating margin rate between 8.5% and 9% and net free cash flow from the order of €250 million.
The lucrative database market
This mature global market is expected to generate more than $40 billion in revenue this year, compared to $22 billion in 2017, according to IDC. Contrary to its initial ambitions, SAP did not succeed in dethroning Oracle. This is mainly due to major developments in this market with the emergence of Amazon Web Services or Google Cloud. Benefiting from a significant competitive advantage as companies’ data hosts, these players have gained significant market share in recent years. However, faced with a growing corporate appetite for high value-added data, traditional players have a card to play.
Maximum staff turnover
Companies in the IT services sector have seen the departure of more than 20% of their workforce in twelve months. This trend is not unusual in the sector, but it is reaching an unprecedented scale, in a context of strong growth and good recruitment dynamics. In addition, employees have new requirements and aspirations. The main criterion is the flexibility of work and the way it is implemented in the company. The American-Indian company Cognizant saw around 35% of its 330,000 engineers leave the company in one year. Capgemini, grouping 32,000 French employees, recently suffered its first strike since 2008, with a demand for a collective increase in remuneration.