Having caught insurance broker Fish Administration earlier this week (see here), Capita is now taking aim at SAP services with the acquisition of Smiths Consulting Ltd, a small SAP services business with 52 employees (and 150 associates) based in Newcastle. Capita is paying up to £12m in cash, on its usual terms ‘cash and debt free’, with £2m of this being dependent on Smith’s profit performance over the next two years.
In its most recent year ended 31 March 2011, Smiths made a pro forma operating profit of £2.4m on a turnover of £11.8m (20% margin). There is no indication as to how the business has performed since, other than CE Paul Pindar’s comment that it has "has a loyal customer base that will benefit from Capita's scale and the scope of service offerings delivered by the wider Group.” This customer base is across government, aerospace, telecommunications and finance.
We assume that Smiths will be brought in to Capita's IT Services division. One of Capita’s top priorities is to build up its IT services credentials. This has been in progress for some time through various bolt-on acquisitions. The most recent deals include the UK operations of telephony automation and voice recognition provider Salmat Speech Solutions in January (see here), as well as Call Centre Technology (see Capita acquires call centre partner), and web application developer Technophobia (see here) last year. It will be fascinating to watch how Capita plans to knit all of these technologies and offerings together.