Magyar Telekom Nyrt announced it signed an agreement on Friday to purchase 100% of KFKI Group, one of the leading Hungarian IT service providers, for a purchase price of Ft 8.17 billion plus an optional earn-out payment of Ft 1.5 billion dependent on the company's 2006 financial performance.
In 2005, the KFKI Group had revenues of around Ft 17 billion and EBITDA of Ft 1.5 billion. The group headcount stood at around 400, including many highly qualified IT experts.
The purchase will be financed through Magyar Telekom’s available credit lines, the company said. Completion of the transaction, which requires approval by the Competition Office (GVH), is expected in the second half of 2006. The acquisition is in line with Magyar Telekom's Value Creation Program announced in August 2004, under which the company plans to build on its competencies in the IT, network and system integration fields, the company said. Together with KFKI, Magyar Telekom will offer an extended product portfolio to a broader range of clients, the statement published on the Budapest Stock Exchange (BÉT) website said.
”In line with our growth strategy, we aim to capture new opportunities in the Hungarian corporate telecommunication services market. IT services such as system integration, managed network services, custom application development and IT outsourcing are becoming the new growth drivers in the corporate market. As a provider of such services, KFKI is a natural addition to the Magyar Telekom group. This acquisition will allow us to widen our product portfolio,” Magyar Telekom chairman and CEO Elek Straub commented.
Although KFKI provides a wide range of IT services, its business is highly complementary to Magyar Telekom’s existing business portfolio. The three companies in the KFKI Group focus on different markets, with KFKI-LNX Zrt providing network integration services, ICON Zrt operating in the system integration segment, and IQSYS Zrt specializing in software development and implementation.