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NEC acquires Northgate Public Services for £475m

Japanese computer services and hardware company NEC has acquired Northgate Public Services, the UK public-sector focused services company, in a deal valuing Northgate at £475m.

Following completion of the transaction, the Company will continue to be named Northgate Public Services, while Cinven, Northgate’s private equity owner, will retain a minority stake and a position on the company’s board.

Northgate’s sale comes after a turnaround led by CEO Stephen Callaghan following his appointment in 2016.

Contract wins over the past two years a £12m deal to supply its housing-management software to South Australia Housing Trust, as well as “substantial” contracts with Richmond Council, Wandsworth Council and West Midlands Police in the UK. In total, Northgate claims that it works with 95 per cent of UK local authorities.

For NEC, the acquisition will provide an outlet for some of its technologies. NEC’s biometric scanning and facial recognition products will be integrated into some of Northgate’s core software platforms, while the company will also be able to tap NEC’s technical expertise in citizen access and smart cities technologies.

“The leadership team from NPS will remain in their roles following the acquisition, and there are no plans for any job cuts or redundancies as a result of the transaction,” pledged the two companies in a statement.

The CEOs of both companies were, understandably delighted. Callaghan suggested that the work done in transforming Northgate over the past two years had made the company “a highly attractive asset to NEC” and that it “represents a step-change in our ability to serve our clients”.

He added: “The increased financial strength, technical capability and market access support NEC provides will allow us to accelerate our growth plans considerably and I am enthusiastic about our future prospects.”

NEC president and CEO Takashi Niino described it as a “highly strategic acquisition for NEC” and “a win-win transaction for all parties”. Echoing Callaghan, he said that the deal would help NEC to expand its “world leading biometrics and AI technology”.

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