April 8 (Bloomberg) -- Sopra Group SA agreed to buy Groupe Steria SCA for about 730 million euros ($1 billion) in stock as two of France’s oldest computer-services providers combine to win customers from larger rivals.
Sopra will give one of its shares for four Steria shares, valuing Steria’s shares at about 22 euros apiece, according to a statement from the companies today. That’s about 40 percent more than Velizy, France-based Steria’s most recent closing price.
The merger helps the companies offer a wider array of services and reduce costs as they compete against larger peers International Business Machines Corp. and Accenture Plc as well as local rivals Atos and Cap Gemini SA.
“It’s a good idea because for these kind of mid-cap companies in IT services, critical size is very important for winning contracts,” Emmanuel Parot, an analyst at Gilbert Dupont in Paris, said before the announcement. 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.
Shares of Paris-based Sopra added 49 percent over the past 12 months through yesterday, 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.
The combination creates a computer-services provider with sales exceeding 3 billion euros, trailing Cap Gemini’s 10.1 billion euros. Sopra and Steria together employ about 35,000 people.
Sopra manages analytics and finance software for Airbus Group NV. It has also worked with Credit Agricole SA to migrate regional banks to a uniform computer system and has developed a system for 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.