BT's computer division chases US acquisitions

BRITISH TELECOM's computer services business, Syntegra, is holding takeover discussions with US groups in a move that would double its sales to more than pounds 1bn.

Bill Halbert, Syntegra's managing director, aims to grow the company to four or five times its current size. It will also see Syntegra increasingly operating independently of its parent, though there are no plans to sell off the company.

Syntegra has been picking up the pieces after the collapse of BT's merger with MCI of the US. Some of the biggest cost savings from the deal involved merging Syntegra with SystemHouse, MCI's systems integration business, which would have created a company with sales of more than pounds 1.2bn.

Mr Halbert said Syntegra's sales in the current financial year were rising strongly, despite the disappointment over MCI, and would reach pounds 400m, an increase of more than 20 per cent. The integration plans were so far advanced that the merger of the two computing divisions was almost completed when WorldCom gazumped BT's takeover offer.

Mr Halbert said the intention was now to grow a lot faster through US acquisitions throughout the year, though he declined to name the targeted companies. Discussions have already begun with some candidates and given the high prices paid in the information technology industry, the strategy could see Syntegra spend over pounds 500m this year.

"We need to get the sort of scale we'd have achieved through the merger with SystemHouse. We need to be several times our size, perhaps four or five times and that has to happen by acquisition. We want to see our turnover in the billions of dollars," continued Mr Halbert.

The systems integration industry is dominated by global giants such as IBM, EDS and Andersen Consulting. Syntegra is small by comparison, but aims to catapult itself into the top five in the world, an ambition backed by Sir Peter Bonfield, BT's chief executive and former head of the computing group ICL.

Under Mr Halbert, Syntegra is widening its focus from the installation of voice and data systems for companies to providing consultancy advice. Recent large contracts include an electricity trading system for British Gas and work on networks for the NHS linking doctors and dentists' surgeries.

Syntegra also expects to continue its organic growth throughout 1998, adding about 1,000 employees to its 3,500-strong workforce.