Siemens buys Romanian Forte Company for 10 million euros

German technology giant Siemens has conquered the third spot on the domestic IT services market by buying Romanian IT solutions provider Forte Company Bucharest in a deal close to 10 million euros, sources close to the deal told Ziarul Financiar.

The Forte-Siemens transaction is yet another case of an IT business built from scratch by Romanian entrepreneurs and then being acquired by a world-class strategic investor. Previous examples include the acquisition by Microsoft of the RAV antivirus technology from GeCAD and the recent buy-out of Iasi-based Radix Company by American firm Ness Technologies.

Siemens, which is one of the strongest industrial groups in Europe, announced last year that it was aiming to achieve an annual turnover in Romania of one billion euros in the next ten years.

Forte Company, one of the main providers of IT services on the Romanian market, was acquired 100% by the Siemens Business Services (SBS) division of the German group. The Forte general manager, Cristian Constantinescu, will stay in his position following this deal. He declined to comment prior to the news conference to be held today.

Negotiations for the acquisition began in the second half of last year and lasted until the end of February.

This move confirms the German’s group intentions to expand to Eastern Europe, following two recent acquisitions in Slovakia.

The buy-out of Forte will enable Siemens to become the third leading international player on the domestic market, after Hewlett-Packard and IBM. Ioana Bucin, a consultant with market analysis company Pierre Audoin Consultants (PAC), told Ziarul Financiar. “Forte developed as a long-term IBM partner for hardware installation and administration, but has shifted its focus towards greater autonomy over the last two years,” the PAC representative said.

Forte is a low-profile company known only to the specialists in the field. It was established in 1990 by employees of the former Baneasa computer factory.

The company currently has seven shareholders, with most of the shares held by Cristian Constantinescu, who has been running the business for 15 years. Data from the Finance Ministry website shows the company posted a 565bn ROL (15 million euros or 17 million dollars) turnover in 2003, while net profits reached 37bn ROL (0.9 million euros). According to company estimates early in 2004, the expected turnover for last year was 20-24 million euros.

Siemens Business Services Romania has approximately 70 employees and made 3.9 million euros in sales in the 2003 fiscal year. “We hope it  will become the fastest-growing branch in the region in a year or two,” Albert Felbauer, general manager of SBS Austria, the company that supervises the operations of all CEE Siemens branches, recently told Ziarul Financiar.

The IT services market in Central and Eastern Europe was worth 4-5bn euros in 2003, according to SBS data. “It is not the value in itself that is interesting, it is the growth prospects: the market will probably reach 7-8bn euros in 2007,” Gunter Kappacher, SBS manager for Europe and South Africa, told Ziarul Financiar last autumn.
mihai.musatoiu@zf.ro ; adrian.mirsanu@zf.ro