Serco buys connections in UK, US

Serco, the contract and facilities management group, has expanded its specialized IT operations across the UK and North America with two acquisitions, a departure from its policy of organic growth. Serco has acquired ITNet, the British IT services company, for £235m and Resource Consultants, Inc.

Serco, the contract and facilities management group, has expanded its specialized IT operations across the UK and North America with two acquisitions, a departure from its policy of organic growth. Serco has acquired ITNet, the British IT services company, for £235m and Resource Consultants, Inc. (RCI), the American IT services company, for $215m (£113m). ITNET is a leading supplier of IT services, business process management and consulting to UK local authorities and private sector companies. French Thornton (the consulting firm) is a wholly owned subsidiary. Its chief executive, Bridget Blow, is to become head of technologies at Serco. Serco hopes ITNET will give it the critical mass needed to bid on larger and more profitable contracts. RCI is a supplier of Human Resources focused business process management, IT services, systems engineering and consulting to the U.S. government, with good contacts with the Pentagon.

Serco, whose main markets include defense and civil government, hopes to make £5m in cost savings from the acquisitions by the end of 2007.

The new acquisitions, subject to regulatory approval, will complement and operate with Serco year-old Government Consulting's existing public sector consulting business, lead by Doug Johnson-Poensgen and Peter Illsley, who both joined Serco from PA Consulting.

Serco is financing the acquisitions through £450m of medium-term loans from Barclays Capital, HSBC and Royal Bank of Scotland.

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