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Tieto Group’s €1.3bn takeover of Evry served to highlight a new wave of mergers and acquisitions (M&A)-led consolidation in the Nordic IT and technology sector.
Industry consolidation is also set to shake up, and produce more M&A targets, in the rapidly growing Nordic datacentre and artificial intelligence (AI) sectors.
Tieto’s acquisition of Evry, one of Norway’s biggest IT firms, will have a very real effect on the Nordic tech landscape. The deal will significantly expand the scope and range of Tieto’s business operations, increasing group revenues in the newly established merged company, TietoEVRY, to around €3bn.
The agreed structure of the merger deal has given the mainly Norwegian shareholders in Evry 37.5% of the shares in TietoEVRY, while Tieto’s shareholders will get 62.5%.
Tieto’s corporate marriage with Evry rode the crest of a corporate wave of high-profile M&A deals in the second quarter of 2019 that have the potential to reshape the Nordic IT sector.
EcoDataCenter’s merger with Fortlax, motivated by the ambition to create a leading Nordic actor in the rapidly expanding datacentre space, will also drive IT sector consolidation in the region. EcoDataCenter’s growth through acquisitions is aimed at positioning the company as the leading Nordic supplier of carbon-positive climate-smart datacentres and new-build projects.
Sweden-based EcoDataCenter wants to fast-track growth in its datacentre operations business through M&A. “We have a clear plan and path to growth,” said EcoDataCenter chairman Lars Thunell. “This will see us engaging in acquisitions as well as mergers. At the same time, we will also gradually develop our existing facilities.”
Read more about Nordic tech suppliers
- The vibrant tech sector in the Nordic region is attracting increasing attention from venture capitalists
- Universities and technology businesses in Nordic countries are working cross-border as part of two pan-Nordic organisations.
- Two of the Nordic region’s biggest IT suppliers merge as competition in their home region increases.
EcoDataCenter’s merger with Fortlax provides a more immediate gateway to pursuing new datacentre business targets across the Nordic region and, by extension, the Baltic states. The primary aim of EcoDataCenter’s new focus on M&A is to lead consolidation in the Nordic industry, said Anders Berglund Hansius, CEO of Fortlax.
“The Nordic datacentre industry is growing quickly,” he said. “Sufficient size and capital is needed to succeed. The merger with EcoDataCenter strengthens our market position and gives us the financial muscle we need to grow successfully, moving forward.”
Mergers are likely to be the most popular, cost-efficient route to consolidation within the Nordic datacentre sector. The EcoDataCenter-Fortlax merger was realised through a share purchase arrangement and a stock swap. Fortlax will continue to operate as an independent subsidiary, with an unchanged management team structure, within EcoDataCenter.
Meanwhile, AI software company Artificial Solutions employed a similar shares-focused deal-making mechanism when it engineered a reverse takeover with Swedish internet of things (IoT) specialist Indentive, headquartered in Linköping.
A niche AI innovator listed on Stockholm’s Nasdaq First North exchange, Artificial Solutions negotiated the takeover of Indentive on the basis of a reverse split of shares.
The Nordic growth realised through its capture of Indentive strengthens Artificial Solutions’ capacity to launch into international markets more successfully, said Lawrence Flynn, CEO of Artificial Solutions.
“The Nasdaq First North listing forms part of our larger strategy to exploit the immense growth opportunities we see within the conversational AI market,” he said. “Our business model is geared for rapid scalable growth with future high profitability and strong cash generation.”
Leading private equity groups such as Nordic Capital and EQT Partners are also driving consolidation in the Nordic IT tech sphere. Both groups are pursuing acquisition targets that provide ready-made fits for technology companies already in their investment portfolios.
EQT is also actively targeting international tech companies that can add value to its existing portfolio companies.
Evidence of M&A trend
Evidence of this trend emerged with EQT’s acquisition of Acumatica, a supplier of native cloud-based enterprise resource planning (ERP) software systems. Located in Bellevue, Washington, the acquired US firm will become a sister company to IFS, an EQT portfolio company and a leading Nordic provider of ERP software.
The takeover gives IFS access to a broader range of R&D capabilities, including Acumatica’s cloud platforms’ building expertise and the US firm’s Acronis cyber protection platforms and technologies.
Nordic Capital’s purchase of Signicat, a growing Nordic force in the digital identity hub and signature solutions domain, has the potential to propel further acquisitions in the same sector by the private group further down the track. Nordic Capital has bought a majority equity stake in Signicat, headquartered in Trondheim, Norway.
The remaining shares in Signicat, which has grown rapidly and organically into a major Nordic innovative force in the verified digital identity arena since 2016, are held by management and Norwegian venture capital group Viking Venture.
Jostein Vik, partner in Viking Venture, said: “Signicat has become the market leader in digital identity in the Nordics. The change of ownership, with Viking working alongside Nordic Capital, will boost the company’s ability to become a global leader in its market area.”
For Nordic Capital, the acquisition of Signicat will invigorate the company’s role as a key actor in driving consolidation in the Nordic IT technology sector. The takeover will also reinforce the company’s position as a leading investor in the Nordic technology and payments sector.
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