Advertisement

Channel programs News

Ciber To Sell Netherlands Business For $25M, Stock Skyrockets

Michael Novinson

Ciber continues along the path toward divesting itself of nonstrategic operations, saying Monday that it plans to sell its 400-employee Dutch business, and sending the channel partner's stock skyrocketing.

The Greenwood Village, Colo.-based company -- No. 43 on the CRN 2016 Solution Provider 500 -- said offloading Ciber Netherlands to Milwaukee-based ManpowerGroup is part of a broader plan to focus on its core business in the IT staffing, implementation, app modernization, consulting and managed services spaces.

"We feel there are great opportunities in the IT services space, but we can't be everything to everyone," Scott Kozak, Ciber's senior director of investor relations, told CRN. "The company wants to invest in growth areas for business."

[Related: Ciber Cutting Staff, Will Propose Divesting Some Business After Sales Plummet]

Kozak said Ciber, in the past year, has gone from more than 500 "option buckets" to just 50, to become leaner and more focused, and hopes to get down to just 15 buckets in the coming months.

The company is looking to exit businesses with poor-quality revenue -- such as those offering low margins, those that are heavily reliant on subcontractors or those that are more susceptible to litigation, Kozak said, as well as some ancillary businesses associated with the 66 acquisitions Ciber made between 1995 and 2010.

Wall Street appeared to be ecstatic about the announcement, sending Ciber's stock soaring 30.6 percent, to $1.56 per share, during trading Monday. The deal was announced before the market opened.

ManpowerGroup will pay $25 million for Ciber's Dutch operations, subject to the retention of certain Netherlands customers six months after closing. The deal is expected to close in mid-June after regulatory approval.

ManpowerGroup was impressed by Ciber's portfolio of Dutch IT projects, particularly as it relates to SAP deployments. The deal should significantly bolster the company's IT capabilities in the Netherlands, according to Jilko Andringa, president of ManpowerGroup Northern Europe.

"A lot of skills are needed and scarcity is happening," Andringa told CRN. "We see the client need to find partners to fix the skill gap."

ManpowerGroup plans to retain the Ciber brand, cross-sell its existing brand to Ciber's customers in the country (and vice versa) and expand IT services in the Netherlands, Andringa said. ManpowerGroup has collaborated with Ciber on previous projects in the country, according to Andringa.


Kozak said Ciber has long struggled with issues around bonus structures for its employees in Germany, the Netherlands and Scandinavia, which are still tied to legacy formulas used before operations in those countries were acquired by Ciber.

Specifically, Kozak said, bonuses for Netherlands employees are correlated with utilization rates rather than project performance as is the standard in the United States, meaning that business units with lots of activity would be eligible for high bonuses even if the specific engagements were losing money.

Ciber began working in early 2015 to better align its global compensation payout system with company performance, though CEO Michael Boustridge said last month that it has resulted in many billable consultants in the Netherlands and other countries leaving the company.

"Change in labor structure in Europe is hard and takes time," Kozak said.

Andringa said compensation is not a concern to ManpowerGroup, and the company will take over Ciber's existing obligations.

This sale comes a month after Ciber announced plans to sell its Australian business -- which has annual sales approaching $10 million, but is losing money -- to local management.

Ciber has struggled in recent months, with sales falling 11 percent in the most recent quarter as Boustridge criticized prior management for eliminating the recruiting arm of Ciber's talent services organization, preventing the company from building a pipeline of prospective customers. Ciber's stock bottomed out at 93 cents per share, its lowest-ever price since the company went public in 1994.

The stock began rebounding after Ciber announced that Mark Floyd -- one of three new independent directors added to the board in 2015 as part of an agreement between the company and activist investor Lone Star Value -- would become its chairman, replacing company founder and former Chairman Bobby Stevenson. The company will be holding its annual shareholders meeting Wednesday.

Advertisement
Advertisement
Advertisement
Sponsored Post
Advertisement
Advertisement