This morning, the European Commission gave the green light to Hewlett-Packard Co.'s (NYSE: HPQ) $300 million acquisition of data center specialist Synstar, as the hardware firm attempts to strengthen its IT services arm (see HP Swoops on Synstar).
Bracknell, U.K.-based Synstar provides a broad range of data center services, including maintenance, help desk, and disaster recovery solutions -- key services in which HP lags behind IBM Global Services, Electronic Data Systems Corp. (EDS), and Computer Sciences Corp. (CSC) (NYSE: CSC).
Adam Lawson, software and computer services analyst at Teather & Greenwood Ltd., believes we will see more of this type of acquisition as the larger players go after slices of the lucrative IT services pie. You are going to see a lot more consolidation," he says. "Any business that has a decent managed services revenue stream is going to be a potential target."
In the U.K. alone, two such firms that are ripe for acquisition are public sector specialist ITNet and applications management firm Xansa, with services giants such as Cap Gemini and Atos Origin potential buyers, according to Lawson.
The analyst believes that the Synstar deal is a shrewd move. This is a nice acquisition -- it makes a lot of sense. It has given HP a good footprint in the U.K. and added some mass to their European operations."