NEC to buy CSG's services, consulting arm

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NEC to buy CSG's services, consulting arm

Updated: Eyes managed services and cloud markets with $227.5m deal.

NEC Australia has agreed to buy CSG's managed services, enterprise services and strategic consulting business for $227.5 million.

The deal was announced to ASX today, following a day-long trading halt of CSG shares.

NEC will take over CSG's technology solutions business for a base consideration of $227.5 million, with a further $32.5 million on offer, pending CSG's financial results to June 30.

According the NEC, the acquisition "significantly [broadened] its capability set in high-growth services", including ERP, CRM, business intelligence, managed services and cloud services.

The company planned to operate CSG's technology solutions division -- comprising CSG Services and CSG Solutions -- as an independent business unit of NEC Australia.

NEC Australia managing director Alan Hyde told iTnews that all 850 of CSG's technology solutions staff would be integrated into NEC Australia, with senior executives reporting directly to Hyde.

"There will be no redundancies in response to this acquisition," he said. "The objective of this opportunity is to create a powerful platform for both organisations to expand and grow."

"The technology solutions business will continue to service all of its customers as per usual.

"NEC Australia will now have the capabilities and scale to successfully compete for some of Australia’s largest ICT contracts and increase our customer base."

Australian print services and IT integrator CSG has been looking to strike an acquisition deal for some time.

CSG expected to raise $190 million from the NEC deal, after capital gains tax and transcation-related costs. Chairman Josef Czyzewski said proceeds would enable it to "pay down debt and return capital to our shareholders".

Last September, the company announced an unnamed suitor had offered $1.20 a share for the company. CSG's share price at close on Monday was $0.63 per share. 

By December, CSG announced the deal was off, citing board dissatisfaction with the offer.

A CSG spokesperson told iTnews' sister publication CRN at the time the process had been costly, disruptive and created uncertainty amongst the company's customers.

David Binning and Allie Coyne contributed to this story.

Updated at 3pm on 31 May to include Alan Hyde's comments.

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