Sopra Group SA (SOP) and Groupe Steria SCA (RIA), two of France’s oldest computer-services providers, are planning to merge in an attempt to win business from rivals including Atos and International Business Machines Corp. (IBM:US), a person familiar with the matter said.
The companies’ boards are meeting today to decide on a combination, said the person, who asked not to be identified because the discussions are private. The companies have been negotiating for six months, the person said.
A merger could help the companies offer a wider array of services and reduce costs as they compete against larger peers IBM and Accenture Plc (ACN:US) as well as local rivals Atos and Cap Gemini SA. (CAP) Sopra, based in Paris, has a market value of about 1 billion euros ($1.4 billion), while that of Velizy, France-based Steria is 522 million euros.
“It’s a good idea because for these kind of mid-cap companies in IT services, critical size is very important for winning contracts,” said Emmanuel Parot, an analyst at Gilbert Dupont in Paris. The companies are complementary geographically, he said. Sopra had 68 percent of revenue coming from France in 2012, while Steria got 40 percent of sales from the U.K. that year, according to data compiled by Bloomberg.
Sopra and Steria shares were suspended. Sopra added 49 percent over the past 12 months, while Steria rose 47 percent.
Both companies were founded in the 1960s and are among the oldest computer-services providers in Europe. Sopra’s revenue rose 11 percent last year, while sales at Steria shrank by 4 percent.
A combination would create a computer-services provider with sales exceeding 3 billion euros, trailing Cap Gemini’s 10.1 billion euros. Sopra and Steria together employ about 36,000 people, according to their websites.
Sopra manages analytics and finance software for Airbus Group NV, has worked with Credit Agricole SA to migrate regional banks to a uniform computer system and has worked with EasyJet Plc to help allocate seats on flights.
Sopra has been the more acquisitive of the two companies, adding HR Access Solutions SAS from FMR LLC as well as COR&FJA Banking Solutions GmbH last year.
The companies may publish statements on the matter as soon as today, the person said. Representatives for Sopra and Steria declined to comment. Boursier.com reported the companies’ plan to merge earlier today.
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