NEC Acquires the Largest Danish IT Company, KMD
NEC Corporation announced the acquisition of KMD Holding ApS, the holding company of KMD A/S (KMD), the largest Danish IT company. NEC is acquiring KMD for approximately 8 billion Danish Kroner (DKK) from Advent International, one of the world’s largest and most experienced private equity investors. The acquisition is expected to be completed by the end of February 2019.
NEC is a leader in the integration of IT and network technologies that benefit businesses and people around the world. This acquisition will accelerate NEC’s global safety business, which it has positioned as a growth engine in its three-year medium-term management plan, the “Mid-term Management Plan 2020,” and is promoting a shift towards service businesses that utilize horizontally deployable platforms. NEC is also expanding its business domain through the utilization of its advanced biometrics and artificial intelligence (AI) technologies to develop areas that include public safety, digital government and smart transportation. These initiatives are being implemented under the “NEC Safer Cities” program, which supports the realization of safe, secure, efficient and equal cities.
KMD mainly provides software and IT services in Denmark through business models that generate profit continuously on a recurring basis, such as software as a service (SaaS) offerings. Specifically, KMD has a strong customer base among central and local governments and has a wide variety of software for supporting the digitization of Denmark, which is the top ranking country in the “UN E-Government Survey 2018,” announced by the United Nations Department of Economic and Social Affairs. In addition, KMD has a successful track record of executing strategic M&A which has broadened its service offering in a number of key verticals.
“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,” said Takashi Niino, President and CEO, NEC Corporation. “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.”
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“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,” said Eva Berneke, CEO, KMD. “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 sees the acquisition as a good match with its strategic ambitions within the public sector. KMD has solid experience and a strong portfolio of software in this market segment. NEC technology and KMD software have many synergistic opportunities and both parties will benefit from the exchange and integration of products, know-how and competencies. NEC expects its cutting-edge AI technologies, “NEC the WISE” and its biometric technologies, “Bio-IDiom” to be among the areas of great mutual opportunity.
Furthermore, NEC will promote the global reach of KMD’s software by utilizing the NEC Group’s sales channels, including the mutual sale of software between KMD and UK-based Northgate Public Services Limited, which NEC acquired in January 2018.
NEC will continue to promote the development of its core technologies and solutions, while acquiring new customer bases, delivery resources, core technologies and business models through M&A and partnerships, in order to further expand the social solutions business, centering on the safety business, and to improve profitability.