Northgate Public Services has been acquired by NEC Corporation for £475 million. The deal, announced today (Tuesday, January 9), delivers “significant technological advantages” for Northgate with NEC’s cutting-edge biometric scanning and facial recognition products being integrated into some of the company’s core software platforms.
Northgate CEO Stephen Callaghan
Established in 1969, Northgate develops software and services for the public sector, mainly in the UK, and employs approximately 1,400 software engineers throughout the UK and India. It works closely with UK police forces and local authorities and NEC’s biometrics technology will significantly enhance identity authentication during police operations and administrative procedures.
This acquisition is expected to be completed by the end of this month and the company will continue to be named Northgate Public Services.
Northgate has seen a period of transformation following the appointment of chief executive officer (CEO) Stephen Callaghan in 2016, securing substantial contracts with government and State agencies, including West Midlands Police.
The company has been contracted by 14 police forces to increase information exchange on victims and offenders, helped the NHS to screen eight million babies for hearing loss, and enabled around 200 housing providers to manage more than two million homes.
A statement by Northgate said this “leading market access within the UK” was one of the major drivers behind NEC’s acquisition of the company, as were the bridgeheads secured into Canada, Australia and New Zealand.
“With 95 per cent of UK local authorities either currently working with, or having previously worked with, Northgate, the company’s insight into what NEC views as a compelling growth market is unrivalled. Similarly, Northgate works with every police force in the UK and the company’s ‘Safety’ offering is expected to be a high growth area,” it added.
The leadership team from Northgate will remain in their roles following the acquisition, and there are no plans for any job cuts or redundancies as a result of the transaction.
Mr Callaghan said it was a “very exciting time to be part of Northgate Public Services”.
“Our colleagues and leadership team have worked incredibly hard over the past two years to get the company into great shape operationally and financially, with the result that it is a highly attractive asset to NEC. This transaction represents a step-change in our ability to serve our clients,” he added.
“Combined with NEC’s business, we will now be able to offer a wider suite of services and software to our existing client base, while also expanding in new geographies and technology sectors.
“I’d like to stress that we see this as simply the beginning of our next phase of development. The increased financial strength, technical capability and market access support NEC provides will allow us to accelerate our growth plans considerably and I am enthusiastic about our future prospects.”
Takashi Niino, president and CEO of NEC, said: “This is a highly strategic acquisition for NEC and is a win-win transaction for all parties, which will provide new and exciting opportunities for both businesses. Northgate Public Services’ excellent reputation and existing access into international markets are ideal for enabling NEC to accelerate business expansion, particularly for our world leading biometrics and artificial intelligence technology.
“In turn, this transaction provides Northgate Public Services with the opportunity to develop its proven and market-leading software across our growing international client base in North America, APAC and other regions.
“We very much look forward to working collaboratively with Northgate Public Services to capitalise on the wide-ranging product synergies we have identified. We see this transaction as a platform for both the next phase of growth for NEC and Northgate Public Services, and an exciting time for both businesses.”
Northgate has been acquired from the international private equity firm Cinven, which will remain a stakeholder in the company with a board position.