Getronics NV - Company Profile, Information, Business Description, History, Background Information on Getronics NV

Donauweg 10
1043 AJ Amsterdam
The Netherlands

Company Perspectives:

Getronics' mission is to enable our clients--both global and local&mdashø meet or exceed their business objectives by supplying and managing advanced, vendor-independent, ICT solutions and services.

History of Getronics NV

The Netherlands' Getronics NV is European leader and one of the world's top five providers of Information & Communications Technology (ICT) services, active in two primary fields of Business Solutions and Consulting, and Systems Integration and Networked Technology. The company offers its corporate clients a full array of ICT services, ranging from strategy consulting to systems implementation, integration, and management; Getronics also offers customers full outsourcing services. Getronics' leap into the top five came with its $2 billion acquisition of American computer pioneer Wang Global in 1999, nearly tripling the company's size and adding Wang's North American market strength. The company followed the Wang acquisition, the largest of a long string of acquisitions made during the 1990s, with a takeover of Olivetti's financial software subsidiary Olivetti Ricerca, boosting Getronics' activity in the financial sector, its largest area of revenues at 35 percent of its total sales. A truly global company, with operations in some 150 countries and nearly 35,000 employees, Getronics' is a contender for a position as industry leader among IBM, EDS, Hewlett Packard, and ICL/Fujitsu. In 2000, Getronics shed some EUR 970 million worth of noncore operations--including a producer of automated teller machines and Spanish computer distribution business Diode&mdashø complete its transformation to a pure-play services provider. The company has plans to break into the industry top three by 2003, promising to double its turnover every three years at the beginning of the new century. Getronics is led by President and CEO Cees G. van Luijk. The company's shares are traded on the Euronext Amsterdam stock exchange as part of the leading AEX index.

Technology Pioneer in the 19th Century

Before becoming an ICT services superstar at the end of the 20th century, Getronics already had established a long history as a technology services provider. The company's origins lay in the creation, by Dutch firm Groeneveld, Van der Pol & Co., of a new subsidiary, Elektrotechnische Fabriek NV., in 1887. This company began business as an installer of control and technical equipment for various industries, including the shipbuilding industry and the newly growing utilities networks.

Groeneveld added to its technology interests in the 1950s when it created Technisch Verkoop Kantoor Groenpol, a sales and distribution subsidiary for industrial products ranging from microswitches to steam turbine components and systems. Groeneveld then combined its sales and distribution wing with its Elekrontechnische Fabriek installation and services unit to form a new company, Groenpol NV., which was then spun off as a separate, public company in the 1960s.

In 1968, Groenpol merged with Geveke NV, a public company that had similar operations in The Netherlands. The new company, which retained a listing on the Amsterdam stock exchange, was named Geveke & Groenpol NV. Despite the merger, the two companies' former operations continued to be run as separate businesses.

Geveke & Groenpol was taken over by Steenkolen Handelsvereniging (SHV) in 1970, which removed the company from the Amsterdam stock exchange. SHV also split up Geveke & Groenpol operations into their installation and sales and distribution components, creating the sales group Groenpol Industriële Verkoop (Groenpol Industrial Sales) under SHV's Groep Technische Handel distribution division.

SHV led its new subsidiary operations beyond The Netherlands, setting up subsidiary operations in Belgium and France. As part of this expansion, the company changed its Groenpol Industriële Verkoop unit's name to Geveke Electronics. By the early 1980s, however, SHV agreed to spin off Geveke into a separate company through a management buyout led by Anton Risseuw, with SHV retaining a position as a minority shareholder. The leveraged buyout was completed in 1983.

Geveke reorganized its operations, combining all of its subsidiary operations under the Geveke Electronics International NV parent company. By 1985, Geveke was prepared to go public again, taking a new listing on the Amsterdam stock exchange.

Acquiring Leadership in the 1990s

Geveke proved itself a new and aggressive contender in the booming market for information and communications technologies. The company began a long string of acquisitions that boosted it from a modestly sized distributor of computer-related technologies to a global ICT powerhouse by the end of the century. One of the company's earliest acquisitions was that of Electric Engineering, which brought Geveke a telematics installation operation in 1986.

Two years later, Geveke stepped up the pace of its acquisitions, bringing in Datex, which became the company's Getronics Software Solutions subsidiary and added software services and consulting operations, and Gematica, which launched the company into Spain with a network and computer systems maintenance subsidiary. The company also built up its distribution arm, purchasing XTEC Computer Systems, which distributed ICT systems, and Klaasing Electronics, giving Geveke a new computer components distribution business. In 1988, the company changed its name to emphasize its commitment to fast-growing electronics industry, becoming Getronics NV.

By the late 1980s, Getronics had captured a leading share of the computer maintenance. Yet Getronics remained a small company, especially compared with the industry's traditional leaders such as IBM and EDS. Posting just NFL 55 million in 1989, Getronics' share price, at around $25 per share, made it a potential target for a takeover. Instead, Getronics intensified its own takeover activity, hitting the acquisition once again as the new decade got under way. After acquiring the information consulting services of Synergie Consultancy in 1990, the company stepped up the pace the following year, acquiring Vanandel, giving it closed mobile communications networks capacity, Computer Uitwijk Centrum, adding automatic data processing operations, and Koning and Hartman, a distributor and servicer of data networks and telecommunications systems.

In choosing its acquisitions, Getronics sought factors such as whether the proposed purchase would produce high value-added activities or improve Getronics' scale. New candidates for the growing Getronics group of companies were Datatraffic, which offered payment solutions and related financial services applications, acquired in 1992 and renamed as Getronics Transaction & Card Systems. That same year the company expanded its computer maintenance wing with the addition of Computer Service Holland, while strengthening its growing ICT business with the Intercai Holding joint venture with KPN Telecom.

These and other acquisitions helped the company build up a network of operations through much of western Europe. The company attempted to fill in some of its geographic gaps, adding ICT services in the Norwegian market with the addition of Cinet, which covered a range of services from systems integration and workplace automation to network and systems management. By the mid-1990s, Getronics had successfully built a position as one of the leading providers to the ICT market in Europe.

The company enhanced that position with the purchase of 50 percent of The Netherlands' Raet in 1995. Raet gave the company important capabilities in the human resources and payroll fields. It also placed the company in conjunction with government-owned Roccade, the former accounting service of the Dutch government, which had joined Getronics in the Raet acquisition. In 1996, Getronics acquired the remaining 50 percent from Roccade--in part in preparation for a proposed purchase of Roccade itself. As Risseuw described the Raet acquisition to De Telegraaf, 'When we took over Raet together with Roccade in 1995, the business was without any future.'

Getronics had been placed on the fast-track toward acquiring Roccade when it was granted the right to make a bid for the company in 1995. Acquiring Roccade would have allowed Getronics to become one of the heavyweights in the steadily growing ICT industry. Instead, after two years of negotiations, the deal fell through and the former government service appeared likely to fall into the hands of a foreign company. Risseuw did not hide his disappointment, saying: 'We're dealing here with a government that only wants to see money.'

The proposed Roccade acquisition also prevented the company from bidding for another company then coming onto the sales block. Olivetti had split off its automation services division, Olsy, as a separate company and put it up for sale in 1995. With its interests tied up in the proposed Roccade purchase, Getronics was forced to allow Olsy to go to another bid. Wang Global, formerly known as Wang Laboratories, which had risen from bankruptcy in 1992, finally acquired Olsy in 1998.

After acquiring a majority interest in Business Management Group in 1997, the company acquired Ark, of Norway, in an effort to improve its relatively weak penetration into the Scandinavian market. Yet that market was to prove a difficult one for Getronics to crack and the company, despite conquering the rest of Europe, remained a minor player in Scandinavia. In 2000, the company sold much of its Scandinavian operations to Norway's Merkatildata, in exchange for an 11 percent share in that company. Germany also presented a difficult market for the company. Meanwhile, Getronics had greater success elsewhere, such as Spain, where it added to its ICT operations when it acquired Grupo CP, a software solutions and consulting business. That same year, Getronics also added the human resource specialists IBM/Asap.

By then, Risseuw was already leading the company in discussions with a new potential acquisition target. Negotiations continued into 1999, despite Risseuw's retirement at the beginning of that year. It was left to newly named President and CEO Cees G. van Luijk to make the announcement in June 1999 that Getronics had agreed to acquire Wang Global for US$2 billion. The acquisition boosted the company's projected sales to some US$4.5 billion by 2000, with a global workforce of some 35,000.

Wang Global had nearly ceased to exist at the beginning of the 1990s. Formerly known as Wang Laboratories, that company had been among the early leaders in the pioneering computer industry. An Wang, who had immigrated from China to complete a PhD at Harvard University, had established his company in 1951 with just US$600 in savings. Wang's company at first sold memory components for computer systems, then began producing calculators. After going public in 1967 and adopting the name Wang Laboratories, the company moved into the office automation segment. Wang soon established itself as a leading company in this new industry, a position assured when it designed the first word processing systems. By the early 1980s, Wang had moved into designing and manufacturing 'mini-computers'--which were still the size of a closet, despite their name--and became one of the foremost names in office computing at the time.

Yet Wang had failed to recognize the rise of the personal computer market, which not only replaced the need for its cumbersome minicomputers but also took over its word processing market. By the beginning of the 1990s, Wang's market had dried up and, in 1992, the company filed for bankruptcy. Emerging from bankruptcy a year later, Wang had acquired new management and a new business plan, reinventing itself as a software services and digital imaging company called Wang Global. Although it sold off its digital imaging wing to Eastman Kodak in 1997, Wang Global succeeded in its resurrection, gaining a strong share of the U.S. market while reinforcing its worldwide presence. The company went on an acquisition spree, including the purchase of Olys from Olivetti, which more than doubled Wang Global's size and gave it a strong share of the European and Asian markets as well.

Getronics' and Wang Global's operations proved highly complementary, reinforcing Getronics' existing operations in key areas, while giving the Dutch company an entry into the United States, a market it had ignored, in large part, until then. Now a global powerhouse (also known as Wang Getronics in the North American market) that counted itself among the top five in its industry, behind leaders IBM, EDS, Hewlett Packard, and ICL/Fujitsu, Getronics prepared itself for still stronger growth. Following on the Wang Global acquisition, Getronics added another Olivetti unit, Olivetti Ricerca (it had already acquired 20 percent through Wang Global). These purchases enabled Getronics to refocus itself wholly on its ICT services activities. In 2000, the company announced its intention to sell of a number of its distribution and hardware businesses, now deemed noncore, in a series of sales and management buyouts. Completed at the beginning of 2001, the selloffs represented some EUR 970 million of Getronics revenues.

After nearly tripling its revenues in the final years of the 20th century, Getronics appeared to have only just begun. Indeed, following the 1999 acquisitions of InterEdge, a web design specialist, BMG, another ICT and strategy consulting group, and the acquisition of Brazil's Connect in 2000, van Luijk declared that the company's ambitions now called for Getronics to join the world's top three ICT groups by 2003, with plans to double its revenues every three years.

Principal Divisions: Systems Integration & Networked Technology Systems; Business Solutions & Consulting.

Principal Competitors: International Business Machines Corporation; Accenture; Atos Origin; Bull SA; Cap Gemini SA; Electronic Data Systems Corp.; ICL/Fujitsu; Logica plc; Misys plc; Sema plc; Unisys Corporation.


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Further Reference

Blenkinskop, Philip, 'Getronics Buys Wang Global,' Reuters, May 4, 1999.'Dutch Company Getronics Scoops Up Wang for $2 Billion,' InfoWorld, May 10, 1999.'Getronics, Merkantildata to Link Ops,' Reuters, April 17, 2000.'Getronics Net Surges, Splits Shares,' Reuters, March 3, 2000.'Getronics waant zich in startblokken wereldtop,' De Telegraaf, March 4, 2000.Scannell, Tim, 'Desinvesteringen Getronics afgerond,' De Telegraaf, January 26, 2001.'Wang Global Agrees to Buyout Offer,' Computer Reseller News, May 10, 1999, p. 37.

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