EDS, CSC vie for BHP's services

EDS, CSC vie for BHP's services

A decision on the new owner of BHP's spinoff services company, BHP Information Technology (BHP IT), is expected to be finalised by the end of May, according to BHP IT officials.

BHP has confirmed it has narrowed its list of buyers down to rivals EDS and CSC. Up to six companies were believed to have been approached to bid for the deal, which will see one of Australia's most successful local services companies become part of a global player.

As an estimated $300 million company, BHP IT currently holds a 3 per cent market share and is ranked ninth in the local services industry, according to 1998 figures from GartnerGroup.

According to a spokeswoman for BHP IT, BHP's decision to sell the spinoff was driven by the need to provide global services infrastructure and support internally and to customers. "The (dollar) value is not the driver. We are more concerned about the service delivery into BHP in the future and . . . providing access to global infrastructure," she said.

The spokeswoman added that the mining company is also looking for a partner who will provide global support services to BHP worldwide and BHP IT's customers.

"The critical part is to get the services we want," she said. "We don't have to own and operate a services business to offer long-term value services and solutions to BHP and external customers." She said that 60 per cent of BHP IT's business is with BHP and the rest is conducted with external customers.

The spokeswoman would not value the deal, but said that BHP IT's 1500 staff would be moved to the new owner along with BHP IT's existing customer base. "We have no concerns about (cultural issues between the organisations)," she said.

"Culture is obviously important. It's one variable we looked at, but it's part of a whole set of variables we evaluated."

Rolf Jester, research director at GartnerGroup's Dataquest, said consolidation, such as the acquisition of BHP IT, is expected in the service market.

"As a general trend, that's what's happening. Big players are going to acquire more specialised and local service providers. We do foresee much more consolidation," Jester said. "In an increasingly global market, very few brands can attract sufficient attention and market share . . . people want flexibility and brands that a big player can deliver."

Spokespeople from both EDS and CSC confirmed that they had been notified of the shortlist but refused to comment on further details until a final decision has been made.

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