9th December 2004
Digica, the IT managed services and outsourcing business, today announced completion of the merger with Fox IT Managed Services. The merged company is now positioned to take a lead as a supplier of IT outsourcing and managed services to local government bodies and mid-market organisations in the commercial sector.
Digica, based in Nottingham, Leeds and Cape Town, has a predominately commercial customer base, whilst the Managed Services Division of Fox IT (primarily based in Woking, Warrington and Daventry) has a predominantly local government and healthcare focus. Combining these businesses creates a company with an unrivalled depth and breadth of services and resources purely focused on medium to large organisations. Traditionally, this part of the market has been poorly served by a myriad of small IT service suppliers, most of whom lack the infrastructure, skills and processes to deliver a world-class quality of service to customers. Building on the reputations and track records of Digica and Fox, the enlarged business will have the resources, technical capabilities and experience to meet the needs of the most demanding customer or prospect. The combined company has annual revenues in excess of £20m, an order book of nearly £30m and around 300 employees.
Fox IT's Global Service Management Consultancy, Training and Product sales Division is not part of these discussions and will remain a separate company.
The newly formed company will adopt the Digica brand and will be headquartered in Nottingham. Bridgepoint will remain the controlling shareholder of the enlarged Digica. In addition, Fox IT and the Directors of Digica will also have a significant shareholding in the enlarged group.
Mark Howling, Chief Executive Officer, commented: “Digica is joining forces with an experienced group of professionals from the Fox IT Managed Services Division who have a terrific track record. This merger will allow us to build on our joint historic successes. The UK IT outsourcing and managed services market continues to grow strongly, outpacing any other segment of the IT services market. With the excellent data-centres, processes, skills and experience of both companies, we will be able to offer unrivalled services to the mid-market, such as enhanced security and high-availability solutions, as well as take a more central role in helping customers get value from IT. "
“This announcement marks a significant milestone in our long-term strategy to extend the Digica offering across market sectors, and to strengthen our depth of offering. The complementary nature of the two businesses makes this a compelling merger for our customers, employees and investors alike. In addition to offering opportunities to achieve synergies, the merger enables us to take best practice from both companies for the benefit of all customers and to ‘scale-up' so we can help customers with more complicated, transformational outsourcing projects We will continue to recruit, retain and develop the best staff to achieve this . “
David Harland will continue as the Chief Executive Officer of Fox IT's Global Service Management Consultancy business and will also become a director of the enlarged Digica. Harland commented: “merging the best of Fox IT and Digica, plus the additional resources that we're investing in the combined company, will allow us to offer a wider range of solutions and increased service levels to our clients.”
Howling, further commented “ Our research indicates the enlarged company will now be a leading player in the local government and commercial market for £100k to £2M annual contracts , in a UK IT outsourcing market valued overall at £5.01bn* in 2003. We have achieved substantial organic growth in recent years, having added a significant number of major accounts. Going forward, our core areas of focus will be further organic growth and a targeted approach to potential acquisitions”.
The Technology, Media and Telecomms Corporate Finance Team at Deloitte acted as financial advisers to Fox IT on the transaction.
* Ovum Holway
“Fox IT are a reliable, trustworthy and innovative partner”
Bob Jewell – Chief Resource Officer – Head of IT,
Welwyn Hatfield Council