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August 16, 2007 10:01 pm

Fujitsu tells of French request for investment

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Fujitsu, which was thwarted this week in an unsolicited bid for France’s GFI Informatique, said on Thursday it was surprised as Paris had asked the Japanese group to invest in the French market.

Fujitsu launched an unsolicited takeover bid for GFI, the French IT services group, in May in a rare move by a Japanese company.

However, after a vote this week Fujitsu only managed to receive 41 per cent of all outstanding shares, well below the 66.7 per cent it needed. GFI fought Fujitsu’s offer, calling it “hostile and unsolicited”.

Takanori Katayama, president of Fujitsu’s global strategies and alliances unit, said the company had discussed its rationale and its price with GFI. “Someone interpreted it as a hostile bid. I thought we had established a good relationship between France and Japan. I spoke with [government officials] and they asked us to make an investment in the French market, and we discussed how we could penetrate and expand our business in the French market.”

Fujitsu, which reported a 80 per cent drop in quarterly operating profit last month because of sharp price falls for systems chips and hard drives, is trying to move away from hardware towards high-margin IT consultancy work.

The Japanese group has been keen to gain a foothold in Europe's IT services market. Although it is a dominant player in the Japanese market, it lags behind industry giants such as IBM in overseas operations – particularly in France, one of the biggest markets in Europe.

Mr Katayama said: “France is the most significant market where we do not have a footprint. We will continue to seek out every possible opportunity to expand our business in the French market, including strategic alliances and possible future acquisitions.” Fujitsu’s bid for GFI was valued at €395m ($532m). GFI said the €8.50-a-share offer “undervalued” the company.

With the Japanese IT services market expected to grow only 2 per cent over the next two years – compared with 7 per cent for Europe, the Middle East and Africa and 13 per cent for China – Fujitsu is keen to pursue overseas acquisitions and tie-ups. The group bought TDS, a German systems developer, in January for €100m.

Mr Katayama said: “In order to compete with IBM we need a differentiating strategy. We need to strengthen our Indian operations and offshore capabilities with regard to Russia.”

But in a coup for the company, Fujitsu said it had been awarded a £500m, 10-year contract by Reuters to provide IT services for the media services group. Fujitsu Services will provide IT services for 17,500 Reuters employees across more than 100 countries.

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