Belgium-based IT solution provider Cegeka and U.S.-based digital IT solution and services provider Computer Task Group Wednesday said Cegeka plans to acquire CTG in a cash deal valued at about $170 million as part of a play to build a global digital IT services company.
Cegeka, a Hasselt, Belgium-based provider of integration data, application and infrastructure solutions across western and eastern Europe as well as in the U.S., will use a wholly owned subsidiary to acquire all outstanding shares of Buffalo, N.Y.-based Computer Task Group for $10.50 per share in cash, for a total implied equity value of about $170 million.
CTG share prices Tuesday closed at $8.00 per share but as of Wednesday morning jumped nearly 28 percent to reach $10.22 per share after news of the proposed acquisition broke. The offer price represents a nearly 45 percent premium to the trailing 90-day volume weighted average share price as of Monday.
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The boards of directors of the two companies have already unanimously approved the merger, which is slated to close sometime this year, subject to regulatory and other concerns.ADVERTISEMENT
Computer Task Group is ranked No. 82 on CRN’s 2023 Solution Provider 500.
With the acquisition of CTG, Cegeka said it expects to become a leading global IT digital transformation services provider, upping its game from its current status as a leading European IT solution provider. The company expects its total 2024 revenue, including its CTG business, to reach 1.4 billion Euros, or about $1.5 billion. The combined company is also slated to have over 9,000 employees in 18 countries.
CTG Wednesday separately reported financials for its second fiscal quarter 2023, which ended June 30. The company reported revenue of $74.6 million, down 9 percent from the $82.8 million it reported for its first fiscal quarter 2022 and significantly below the $92.2 million it reported in 2021.
CTG blamed the decrease in revenue on a continuing shift in its mix to more solutions-based and services-based business as well as macroeconomic conditions, and said it disengaged from over $15 million in its lower-margin, nonstrategic technology services business.
However, the company’s North American business grew to $26.0 million from last year’s $20.3 million, which included organic growth of 10 percent as well as contributions from CTG’s late 2022 acquisition of Eleviant.
CTG also reported a GAAP net loss of $130 million, a significant change from the net income it reported last year of $2.0 million. On a non-GAAP basis, CTG reported net income of $1.9 million, down from last year’s $2.3 million.
Cegeka’s acquisition bid is not the first for Computer Task Group. CTG in 2020 was pursued by Assurance Services Group, but even after a couple of rounds of bidding no agreement was reached.
CTG was not available to discuss the deal. However, in response to a CRN request for more information, the company emailed a statement attributed to CTG President and CEO Filip Gyde that read, “Due to CTG’s status as a publicly listed entity, we must comply with all legal procedures and requirements leading to the closing of the transaction, including exercising discretion in sharing additional details related to the acquisition at this stage.
“We are excited about the opportunity to deliver even greater capabilities and knowledge to the market as part of a larger organization with a proven track record of delivering customer outcomes through digital solutions. The combined depth and experience that CTG and Cegeka can bring will allow our customers to accelerate their digital journeys to achieve even more.
“We look forward to a successful conclusion to this acquisition.”
Cegeka CEO Stijn Bijnens, in a prepared statement, said the deal aligns with the company’s long-term strategic vision for growth and ambition.
“This merger is a logical next step in the continuous growth journey of Cegeka,” Bijnens said. “In CTG, we find a partner that complements our customer and service portfolio and strengthens our capabilities and knowledge.”
CTG’s Gyde, in a separate prepared statement, called the acquisition of the company a testament to the significant efforts it has made to become a pure-play digital IT solutions provider.
“At CTG, our mission is to drive better, faster results for our customers with high-value digital transformation solutions,” Gyde said. “In Cegeka, we are pleased to have found a partner that will enable us to accelerate this important work. We are confident that joining with Cegeka is in the best interest of our employees, will continue to drive the high-value services and solutions our customers have come to expect, and will deliver immediate value to our shareholders.”LEARN MORE: Mergers and Acquisitions | Professional Services
Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at [email protected].
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