Skillsgroup makes pounds 32.5m acquisition

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The Independent Online
SKILLSGROUP, the computer services group, yesterday announced its third deal in less than a month with the acquisition of the UK training division of Cap Gemini, the Anglo-French computer giant, for pounds 32.5m.

The deal takes Skillsgroup's spending on acquisitions to more than pounds 70m this year, in line with the strategy outlined in February by David Southworth, the chairman.

The deals complete the transformation of Skillsgroup which started last year, when the company started selling non-core divisions in order to concentrate on training and the installation of large computer servers.

"These recent transactions significantly enhance the earnings potential of Skillsgroup, moving us closer to our target of 10 per cent operating margin," Mr Southworth said.

The Cap Gemini business was immediately absorbed into QA, Skillsgroup's training division. Rob Burnham, QA's managing director, said the acquisition would allow QA to offer a broader range of training courses.

While QA currently specialises in technology-based training, the Cap Gemini division provides courses in project management and systems development.

As part of the deal, Cap Gemini has agreed to use the training division as an exclusive supplier for two years, guaranteeing Skillsgroup revenues of more than pounds 10m. Last year the business made pre-tax profits of pounds 3.2m on revenues of pounds 16.5m.

The acquisition is likely to speed the stock market's reappraisal of Skillsgroup as a services group, rather than a reseller of computer hardware. The shares, which were one of The Independent's tips of the year, rose 18.5p to 323p yesterday. They started the year at below 200p.

Analysts pointed out that, even after their recent rise, the shares trade on a modest multiple of 22 times this year's expected earnings. The large discount to other companies in the sector means they are likely to rise further.