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Tieto to focus on core business, sells Germany and Netherlands operations

Staff writer ▼ | February 4, 2013
Tieto Corporation, an IT service company, said it will sell the majority of its operations in Germany and Netherlands to the German industrial group Aurelius.
Tieto Corporation
Tieto CorporationTieto Corporation, an IT service company, said it will sell the majority of its operations in Germany and Netherlands to the German industrial group Aurelius.


The divestment also includes dedicated development resources in Poland and India. Closing of the deal is expected to take place during the second quarter of this year, subject to closing conditions, including anti-trust clearance. The divestment is a consequence of Tieto's strategy to focus its operations on core businesses and divest sub-scale businesses where synergies are limited.

Net sales of the divested businesses amounted to more than $150 million (110 million euros) in 2012. German businesses were loss-making in 2012 and the divestment will improve Tieto’s operating margin of underlying business by some 0.5 percentage points based on 2012 performance. Tieto booked about 30 million euros in impairment in the fourth-quarter 2012.

"Tieto’s aim is to enhance its industry expertise with repeatable solutions and find synergies within all operations. The divestment of local German and Dutch businesses is a natural step as the sold operations have limited synergies with our core businesses. This arrangement is expected to be very good for our employees, Aurelius and Tieto," says Kimmo Alkio, president and CEO of Tieto Corporation.

At the time of the closing, the company is expected to book approximately five million euros in additional divestment costs, mainly related to taxes. The cash flow impact will amount to approximately 20 million euros negative, mainly due to the restoration of shareholders equity in Tieto Deutschland GmbH, which occur between signing and closing. The divested business operations, including around 900 employees in total, will be transferred to the new owner at the time of closing.

"Information technology will be an important growth driver for Aurelius in the coming years. The acquired businesses from Tieto represent our fourth investment in this sector over the last twelve months," said Dirk Markus, chairman of the executive board of Aurelius.


 

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