Ster-Projekt goes shopping
Chief Executive Piotr Smólski says he plans to integrate all of the firm's acquisitions into a single entity that could overtake ComputerLand (CL) to become Poland's second largest IT integrator.
Last week, Ster-Projekt initiated merger procedures with Telmax, a smaller IT firm specialized in energy sector systems. In practice, the deal amounts to an acquisition of the smaller partner through a share swap. The merged company's market capitalization will stand at around zł.370 million. Telmax accounts for just zł.30 million of this amount, but is a valuable acquisition all the same, creating a rival to CL in the IT systems for the energy sector segment. CL also made an acquisition in this market last year and unsuccessfully bid for Telmax.
Smólski said the company is considering another small acquisition in the coming months, which could cost around zł.15-20 million. However, these moves amount to no more than laying the groundwork for a merger with Emax, a Poznań-based firm that Smólski said "has been in the works for some time now. Both companies seem ready for a merger." Their combined sales in 2003 amounted to zł.590 million, or 10 percent higher than those of ComputerLand.
However, Emax Chief Executive Piotr Kardach said last year that the talks are confined to plans of long-term co-operation, rather than a merger. Kardach was unavailable for comment last week, but a source within the company said that "there has been no change of position."
While analysts at the BPH-PBK brokerage house point to the "clear long-term benefits" of Ster-Projekt's aggressive acquisition strategy in their report published last week, they seem skeptical of the company's ability to fulfil its grandiose ambitions, emphasizing the company's failure to meet its 2003 revenue forecast. Instead of the planned zł.370 million, the integrator earned zł.305 million, although its profit was only 10 percent lower due to higher than expected margins on contracts.
Smólski cast aside criticism of the company's condition, saying that the figures illustrated the company's shift away from chasing methods of boosting revenues in favor of a focus on higher-margin services.
"We have not been bidding in tenders that involve large amounts of hardware," he said. "The lower revenues reflect this shift in our strategy."
He also pointed to another of this year's acquisitions as an illustration of this approach. DRQ, a Kraków-based software maker and integrator, which Ster-Projekt bought in the first week of 2004, recorded revenues of just over zł.20 million last year, but earnings before interest and taxes (EBIDT) represented nearly 40 percent of this amount. This type of business model, said Smólski, is Ster-Projekt's future. Whether it will also prove to be the way to become the number 2 IT firm in Poland, remains to be seen.
Last week, Ster-Projekt initiated merger procedures with Telmax, a smaller IT firm specialized in energy sector systems. In practice, the deal amounts to an acquisition of the smaller partner through a share swap. The merged company's market capitalization will stand at around zł.370 million. Telmax accounts for just zł.30 million of this amount, but is a valuable acquisition all the same, creating a rival to CL in the IT systems for the energy sector segment. CL also made an acquisition in this market last year and unsuccessfully bid for Telmax.
Smólski said the company is considering another small acquisition in the coming months, which could cost around zł.15-20 million. However, these moves amount to no more than laying the groundwork for a merger with Emax, a Poznań-based firm that Smólski said "has been in the works for some time now. Both companies seem ready for a merger." Their combined sales in 2003 amounted to zł.590 million, or 10 percent higher than those of ComputerLand.
However, Emax Chief Executive Piotr Kardach said last year that the talks are confined to plans of long-term co-operation, rather than a merger. Kardach was unavailable for comment last week, but a source within the company said that "there has been no change of position."
While analysts at the BPH-PBK brokerage house point to the "clear long-term benefits" of Ster-Projekt's aggressive acquisition strategy in their report published last week, they seem skeptical of the company's ability to fulfil its grandiose ambitions, emphasizing the company's failure to meet its 2003 revenue forecast. Instead of the planned zł.370 million, the integrator earned zł.305 million, although its profit was only 10 percent lower due to higher than expected margins on contracts.
Smólski cast aside criticism of the company's condition, saying that the figures illustrated the company's shift away from chasing methods of boosting revenues in favor of a focus on higher-margin services.
"We have not been bidding in tenders that involve large amounts of hardware," he said. "The lower revenues reflect this shift in our strategy."
He also pointed to another of this year's acquisitions as an illustration of this approach. DRQ, a Kraków-based software maker and integrator, which Ster-Projekt bought in the first week of 2004, recorded revenues of just over zł.20 million last year, but earnings before interest and taxes (EBIDT) represented nearly 40 percent of this amount. This type of business model, said Smólski, is Ster-Projekt's future. Whether it will also prove to be the way to become the number 2 IT firm in Poland, remains to be seen.
