TopS BI merges with Systematica

Source: www.ospint.com -- Systematica, a National Computer Corporation (NCC) company, and Tops Business Integrator have announced their merger. The merger will be carried out through the exchange of shares between the stockholders of Systematica and TopS BI without cash payment or going out of business of either of the parties. The merger documents were signed on March 27th, and the newly-merged companies are coordinating anti-monopoly issues with the authorities now.


The new company is part of National Computer Corporation and is referred to as the Systematica Group. The plan is to position the new company as an IT services provider. As of the year 2006, the companies' overall turnover is over US$230 million of which $71 million is TopS BI's share. The total number of staff is around one thousand. It is assumed that the Systematica Group's turnover will come very close to $300 million this year.
The plan for the first stage of the merger is for each part to remain independent legal entities. In the future the managing company along with AND Project (also an NCC company), TopS BI and Systematica will form the structure of the Systematica Group. The managing company will handle issues related to personnel, investment, marketing, finance and legal functional departments.

Strategic management of the group will be carried out by the board of directors chaired by Leonid Boguslavsky, TopS BI board chairman, and Anton Tsitsenko, president of Systematica. Leonid Goldenberg, Systematica's chairman until recently, will handle operational issues as president of the Systematica Group. TopS BI's general director Felix Glikman has been appointed chairman of the Group's board, a coordinating body that will be formed from the top management of all the three companies (AND Project, TopS BI and Systematica).

Systematica was formed in 2004 from Aquarius Data, Aquarius Consulting and AND Project, the National Computer Corporation's business divisions that worked in system integration and consulting. Although the holding's new venture showed some good growth of 60 percent in 2006, it became clear that Systematica would not be able to compete with large systems integrators. The management viewed a merger as the best solution to the problem. Last year a separate board of directors was formed for managing Systematica independently from the NCC. Besides, it was decided to preserve the AND Project trademark which is a subsidiary of Systematica today.

The merger with TopS BI whose owners were just considering similar options for the company development became the first step on the way of realizing the new strategy. "We found each other", said Goldenberg. "In a certain sense we are pioneers, in another sense we are following the general trend", Glikman pointed out. The managers of the merged companies believe that it is rather difficult to find another such pair of systems integrator companies comparable size-wise that fit together so well and do not have any competitors in their main fields of business.

One of Systematica's strengths is big infrastructure projects (over $100 thousand worth) and automation of government offices. Governmental orders bring over 70 percent of the company's revenues. TopS BI, that specializes in consulting and implements Microsoft, Oracle and SAP business applications, on the contrary, has no previous experience in the public sector.
The government's automation expenses are growing not only because of the extending infrastructure but also due to management systems implementation. "Today the government has learned to use the 'right' services", says Glikman. The synergy expected of the merger is to manifest itself in the public sector which has long-term projects that require contractors with qualified and experienced personnel, and adequate financial and managerial recourses.

According to Systematica, the company has very good sales managers, and TopS BI has excellent engineers. Today TopS BI's contribution to the business is around 50 percent while Systematica is providing only 18 percent of the services. The joint company's objective for the first year is to bring Systematica's share in the overall turnover to 50 percent. It is an ambitious plan given the fact that Systematica's revenues are twice as big as TopS BI's turnover. Yet, according to Goldenberg, mere mentioning the possibility of expanding the range of services provided by Systematica has had a considerable impact on a number of projects long before the actual merger with TopS BI.

According to Boguslavski, should the merger have never taken place, each company would have had to launch internal start-ups. In TopS BI's case that would have been projects in the public sector, while Systematica would have gone for big business management and development systems in the private sector.

The only common point in the two company's fields of activity is the implementation of Microsoft Dynamics AX. Yet AND Project mostly specializes in industry solutions while TopS BI focuses on products for financial institutions. Today TopS BI and AND Project are working together on a number of projects for governmental organizations.

For this year TopS BI and Systematica are going to rely on their own financial resources for the merger related purposes. Bigger investment will be required for the realization of the ambitious plans set for the future, yet the way it will come in is not yet clear. One thing that is known for the moment is that the group will most probably want to acquire some consulting businesses.