Wang Laboratories Inc.'s plan to buy Olivetti SpA's computer services division would give the company a much-desired foothold in the financial services sector.
Wang said Monday it would pay $390 million for Olsy, a Spokane, Wash.- based company best known for branch automation and self-service banking terminals.
The deal, which is set to close this month, would turn Wang into a major provider of computer services to banks and other financial institutions.
Last year, more than 50% of Olsy's $2.3 billion of worldwide revenues and 80% of its U.S. revenues came from the financial services sector.
Billerica, Mass.-based Wang is the latest in a string of general technology companies that have looked to bolster their presence in financial services through acquisitions.
Last April, Hewlett-Packard Co. bought Verifone Inc., a leading supplier of point of sale systems. And in September, Compaq Computer Corp. acquired Tandem Computers Inc., a major provider of transaction processing hardware.
Wang "considers the banking solution to be a major asset of Olsy," said Massimo Gallotti, Olsy's president and chief executive officer. "Their aim is to preserve this."
A company once known for its hardware, Wang has concentrated on computer services since emerging from Chapter 11 bankruptcy protection in 1993. Now the company, which has annual revenues of $1.3 billion, specializes in designing and supporting computer networks.
The acquisition would create a new company, Wang Global, which would have $3.6 billion of annual revenues, 20,000 employees, and customers in 130 countries.
Wang Global would compete for general technology services contracts with the largest players, including International Business Machines Corp. and Electronic Data Systems Corp. In the software and banking terminal businesses, it also would come up against some smaller companies, such as Broadway & Seymour Inc.
"The objective is delivering more services, better services, and better coverage," Mr. Gallotti said, "so this can only" affect the banking business "in a positive way."
The acquisition would bring Wang several influential banking clients. Citicorp and nine other Top 100 banks worldwide use Olsy's branch automation system, Mosaic OA, according to the Tower Group, a research company based in Newton, Mass.
Frank Caine, a Wang executive vice president and its chief financial officer, called Olsy "highly complementary and a terrific fit." Olsy's international presence is also a positive, he added.
Observers said Olsy's parent company, Milan-based Olivetti, has been refocusing on telecommunications services, so the decision to sell Olsy came as little surprise.
"This is a way to tactically disengage from a vertical industry that might not be considered strategic to them any more," said William Bradway, analyst at Meridien Research, Needham, Mass.
Karl Keirstead, an analyst at Lehman Brothers, called the deal "cheap ... it's a real fixer-upper for Wang."