A conversation with Ruben Gofflo, M&A Director of Cegeka.
The M&A Award for Best Mid Cap Corporate Deal 2023 underpins Cegeka’s clear strategy to become a truly global provider of digital IT solutions and services. Ruben Gofflo, Director M&A at Cegeka, expands on the deal of acquiring industry peer CTG, representing an equity value of approximately 170 million US dollars. A deal with unprecedented characteristics and a milestone in the Belgian IT landscape.
Ambitious growth strategy
Before acquiring CTG, Cegeka was a Belgium-based leading European IT solutions company serving around 2500 customers with about 6000 employees spread over Europe. They are organised along three interconnected business lines: infrastructure, applications, and data. The customer base includes international renowned names, such as QPark, Bridgestone and Terumo. Ruben Gofflo, responsible for all mergers and acquisitions for the group, says that ambition and growth form an integral part of Cegeka’s DNA: “Three years ago, our founder and majority shareholder André Knaepen set an objective to reach a revenue goal of 1 billion euro by 2023. Although it seemed farfetched back then, we are well on track to meet this ambitious milestone by growing both organically and inorganically. A long-term vision for growth and a shared entrepreneurial drive have been our best companions so far.”
Talking to ‘Belgians’: a cultural click
As a fast-growing company, Cegeka already went through several acquisitions recently. CTG was on their radar screen for a while. NASDAQ-listed Computer Task Group, Inc (CTG) is also a leading provider of digital transformation solutions with USD 325 million revenue in 2022. Ruben says they offer very similar services and serve the same type of customers as Cegeka, albeit with one big difference: “CTG count half of their revenues in the US and the rest in European markets. The US was the expansion we were looking for to become a true global player and broaden our playing field from Europe to the US. There was also a sense of proximity for the European markets they are serving, like Belgium, Luxembourg, and France, where they are renowned for their testing solutions. We’re glad to add these to our portfolio. From the moment we started talking last year, we felt an immediate cultural connection with the management team that was being headed by a Belgian CEO, Filip Gydé.”
Deal with unprecedented complexity but flawless execution
CTG being a NASDAQ-listed company, required careful execution of the acquisition process due to several stringent duties in the US. After an initial non-binding offer, a competitive auction process needed to be organised by CTG’s Board of Directors to maximise the value of the company for its shareholders. While Cegeka didn’t have experience in delisting a NASDAQ-listed company, they met all the required deadlines. There were two key-reasons which differentiated Cegeka from other bidders when getting to a final agreement at a price of 10.50 USD per share of CTG: they came extremely prepared and completed an impeccable due diligence in 6 weeks, and had their financing fully secured, providing a lot of deal certainty.
Late nights
Ruben remembers the late nights during the auction process: “Our team was completely committed to hitting all deadlines in the process, which required a lot of efforts in a very condensed timeframe. But it paid off: apparently, there was a second bidder offering 10.25 USD per share, but they couldn’t complete their due diligence and financing in due course. CTG therefore decided to accept our offer and granted us an exclusivity period of about a week to get the final aspects done. We signed the agreement on 9 August, and after a period of obtaining the necessary regulatory approvals and accreditations, we successfully completed the tender offer on 13 December. 73.79 % of all issued and outstanding shares of CTG were validly tendered, the condition being that a minimum of two thirds of all outstanding shares needed to approve the offer.”
Unique in the Belgian IT landscape
Upon completion of the merger, CTG became a wholly owned subsidiary of Cegeka, and CTG common shares are no longer listed on NASDAQ. The combined company is now a powerful IT player with an extended portfolio of integrated end-to-end solutions, operating in a global context covering 19 countries and employing 9,000 IT professionals. Stijn Bijnens, CEO of the group, will continue to lead Cegeka in sync with the sustained growth strategy.
Ruben points out that the merger can be considered as unique in the Belgian IT landscape: “The IT environment in Belgium is often confronted with foreign multinationals acquiring Belgian tech enterprises and moving decision centres to other countries. Now it’s the other way around: it’s really unique that a Belgian IT services company makes a vast acquisition in the US market”. Ruben believes this shows that if you’re strong enough in your home market and you’re ambitious, there’s nothing stopping you to also grow in the US. On a personal note, he adds: “Getting involved in the NASDAQ delisting process is one of the most exciting experiences I had in my career thus far.
To the benefit of all parties involved
The impact and benefits of the deal are straightforward for Ruben: “Our customers will benefit from a broader portfolio of IT solutions, hence an improved service. And our joint employees will all be part of a larger international organisation, resulting in more career opportunities.”.
CTG shareholders received a price for their shares that was more than 40 percent higher than the average price over the last year, while the liquidity of the shares was low.
Ruben concludes that it’s a good deal for everyone involved: “In addition, we believe we can give more weight to our ESG initiatives. As we will be operating from a bigger platform, we’ll expand our solutions and initiatives to the rest of the world. I think of examples like gender diversity in IT, which is still a men’s world, and our commitment to the CO2 neutralization of or own footprint.”
Integrating two giants
Now that the complexity of the deal is out of the way, Ruben says that the next big thing is integration: “It will require bigger efforts in Europe than in the US, as we are facing various mutual markets, legislations, etc. Streamlining two large organisations is never easy, and we don’t want to force hasty changes upon our organisations. In 2024, we want people to start talking to each other and seize the momentum of this deal, while our teams work on integrating the backend processes. It’s about connecting, getting to know each other and the huge number of opportunities that are presenting themselves. We will integrate the businesses in sync, with the objective to start operating as ‘one Cegeka’ in 2025”.
‘In close cooperation’
The work towards the deal was fully in line with Cegeka’s motto ‘In close cooperation’. Ruben said his close collaboration with a team of about 10 people and with the Board of Directors was vital for the successful making of the deal: “Keeping everyone aligned on this deal has been a big effort, which was only achieved by keeping all stakeholders involved and leveraging each other’s expertise.” He continues humbly: “I was just in charge of the transaction; the business was showing the real value. With the help of our team of experts, varying from HR to Legal plugging in, we brought about a successful result.”
Ruben says the tagline will be even more important in the future: “We will keep working in close cooperation with our customers. We are big enough to handle their increasingly complex IT needs, but still small enough to care about every single customer.”
Winning the Award for Best Mid Cap Corporate Deal
Cegeka announced to be honoured to receive this recognition at the Belgian M&A Awards, which is a testament to their vision and strategy. The jury recognized the deal as a milestone for Cegeka, which generated pride at their end: “The jury consists of people who know very well what M&A is all about. To be recognized by such industry experts that we respect deeply, makes us very proud. We are also thrilled with the positive reactions we got announcing the prize”, he concludes.
One piece of advice
Ruben happily shares one piece of advice for people embarking on a similar journey: “Think it over in detail and get the necessary advisors to assist you. Stick to your plan and work hard, although that is no recipe for success: a higher competing offer would have been a game-changer. Finally, make sure you keep all relevant people well involved and informed”. To our question to summarize the deal in one sentence as Cegeka’s M&A Director, Ruben shares his mantra: “I’ve never done it before, so I think I should be able to do it.”
Cegeka emerged as the winner at the M&A Awards 2023 in the category of Best Mid Cap Corporate Deal 2023.
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