Mergers and Acquisitions, Enterprise, Mergers and Acquisitions, Content, Vertical markets

NEC Acquires IT Service Provider for $1.2 Billion

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NEC has acquired KMD Holding ApS, a major IT services provider and custom software developer for public safety and government agencies. The US$1.2 billion deal is expected to be finalized in February 2019.

According to an NEC business presentation about the KMD acquisition:

  • KMD's annual revenues were roughly US$650 million in 2017.
  • Roughly 72 percent of revenues are recurring in nature.
  • The company has an EBITDA margin of about 19%
  • That KMD means profits were about US$123.5 million in 2017.
  • That also means NEC valued KMD at just under 10 times EBITDA based on 2017 numbers; we don't have 2018 financial results.

The stats don't end there. According to KMD's website, the company has:

  • Been in business for more than 45 years;
  • grown for more than 20 years;
  • delivered more than 300 solutions and services based on the company's own software;
  • emerged as Denmark's largest software development center; and
  • grown to more than 3,200 employees.

The KMD acquisition will accelerate NEC's global safety business, while boosting the company's related biometrics and artificial intelligence (AI) work across public safety, digital government and smart transportation, the company says. The efforts are tied together under the "NEC Safer Cities" program.

NEC Acquires KMD: Executive Perspectives

In a prepared statement about the deal, NEC CEO Takashi Niino said:

"Denmark and the United Kingdom are considered European role models for the implementation of unified digital government measures in order to improve administrative services and reduce costs. Through this acquisition, NEC will acquire a business model that leverages platforms in the digital government domain as it aims to expand business from northern Europe to the whole of Europe and globally."

Added KMD CEO Eva Berneke:

"This is an historic moment for KMD. Becoming a part of NEC will give KMD a new and very robust platform for the strategic development of our business. NEC develops cutting-edge technologies and has a global organization with strong capabilities. NEC is a world-renowned brand and like us has a strong history when it comes to the development of society through technology. NEC focuses on solutions for society and we are proud that NEC acknowledges our competencies in this respect. We look forward to working together on achieving new common goals and making even better products for our customers."

NEC Acquires KMD: Potential Synergies

NEC will also strive to build synergies between KMD and UK-based Northgate Public Services Limited, which NEC acquired in January 2018.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.