RHS Company and Tornado Systems, two of Romania's biggestIT&C distributors, which have recently got the CompetitionCouncil's approval to combine their businesses into one, are forthe time being planning to integrate their operations to slashcosts.
Talks about a possible merger are not scheduled on the "mediumterm" between the two firms' shareholders.
"Legally, the structure of the deal is not included in the'merger' category. Practically, an operational integration is beingcarried out, which means putting together the two companies'know-how and resources," Dragos Popescu, general manager and ownerof RHS, told ZF, thus suggesting the delicate discussions aboutcontrol over the new entity have been postponed for later. "First,we want to specify there will not be any new entity, at least onthe medium term. In the first stage, control in the two companieswill be held by the current shareholders, and only the shareholderstructure will change through a share swap. We plan to put up apartnership with equal rights within a year. The plan includes acapital inflow of another 7-8m euros during next year".
Which are the first effects of changes brought by the agreementbetween the two firms? The companies have started segmenting theiractivity and have a joint central headquarters, RHS' head says.
Popescu says, "the businesses of RHS Company and Tornado Sistemsare 85% complementary (...) and the client portfolio is alsocomplementary".
As for personnel, Popescu states the two companies are notplanning any layoffs and intend to keep their 200 employees. He hasnot provided additional data, but a comparison between the currentnumber of employees and the one the two firms had in late 2008shows distributors have dramatically cut their headcount. The moveis not surprising, though, as plummeting sales have promptedsimilar actions in the case of other players on the market aswell.
Popescu says the IT&C distribution market has halved thisyear, but RHS and Tornado will see a smaller decrease together.
The two firms expect 120m-euro turnover and a 1-2% profitabilityrate for this year.
One of the biggest problems related to the operationalintegration of the two companies pertains to the unification of ITsystems.
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