NEC agrees £475m deal to buy Northgate Public Services
Japanese titan acquires UK government IT specialist
One of the UK public sector’s major IT suppliers, Northgate Public Services (NPS), is set to be acquired by Japanese technology monolith NEC.
NPS’s current owner, UK-headquartered private-equity firm Cinven, has agreed a £475m deal to sell a majority stake in the software and services house. Following the buyout’s completion, which is expected to take place before the end of the month, the company will continue to operate under the name Northgate Public Services. Cinven will retain a shareholding and a seat on the NPS board.
Northgate Public Services works across the local and central government, housing, law enforcement, transport, and healthcare sectors. It claims that “95% of UK local authorities” are current or former customers. Its Connect suite of software applications for the police is used by 14 forces across the country, and its international clients include the housing trust for the state of South Australia.
One of the key advantages of the acquisition, the two parties claim, will be the opportunity for NPS to integrate NEC’s facial-recognition and other biometric technologies into its software products.
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“Combined with NEC’s business, we will now be able to offer a wider suite of services and software to our existing client base, whilst also expanding in new geographies and technology sectors,” said NPS chief executive Stephen Callaghan. “I’d like to stress that we see this as simply the beginning of our next phase of development. The increased financial strength, technical capability, and market-access support NEC provides will allow us to accelerate our growth plans considerably, and I am enthusiastic about our future prospects.”
NEC chief executive Takashi Niino added: “This transaction provides NPS with the opportunity to develop its proven and market-leading software across our growing international client base in North America, APAC (Asia Pacific) and other regions. We very much look forward to working collaboratively with NPS to capitalise on the wide-ranging product synergies we have identified.”
Accounts for NPS holding company Argon Topco Limited reveal that, in its 2017 fiscal year, NPS saw revenues decline by 10.4% annually to £163.5m, while pre-tax losses widened from £28.5m to £44.3m. The firm employs 2,314 staff and is headquartered in Hemel Hempstead. It runs a further 10 offices across the UK, as well as outposts in Mumbai, New Delhi, and Sydney.
NEC, meanwhile, has been in operation since 1899 and turned over ¥2.7tn – equivalent to about £17.5bn – in FY17. Based in Tokyo, the company has almost 108,000 employees worldwide.
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