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Business Deals

Japan's NEC buying midtier British IT services firm for $640m

Deal aimed at bolstering sales of crime prevention tech

NEC looks to make half its revenue overseas in the future, President and CEO Takashi Niino says.

TOKYO -- Japanese electronics company NEC will purchase a midsize U.K. information technology company in an effort to strengthen sales of specialty facial recognition technology in a country increasingly on guard against terror.

NEC said Tuesday it will spend 475 million pounds ($642 million) to acquire all issued shares in Northgate Public Services from a British private equity firm, looking to conclude the deal by the end of this month.

Northgate is based in Hertfordshire, near London. The business has a track record of providing software to police departments for managing crime data and reading license plates, as well as to central and local governments for handling tax collection and social insurance payments. The IT company, which earned revenue of about 163 million pounds last fiscal year, also has a presence in markets such as Australia and India.

The Japanese company set its sights on Northgate because of the British company's "dominant shares in several fields" and "systems products that can be expanded horizontally into other countries," NEC President and CEO Takashi Niino told reporters Tuesday in Tokyo.

Along with using Northgate's sales networks to peddle technologies including biometrics and artificial intelligence, NEC intends to help the software and services provider expand its offerings worldwide via the Japanese company's overseas hubs.

NEC has outlined plans to invest a total of 200 billion yen ($1.78 billion) in overseas mergers and acquisitions, including in North America and Europe.

"Roughly 28% of revenue comes from abroad now, but 50% would be desirable," Niino told The Nikkei on Tuesday. "We will pursue this challenge for the long term."

British authorities are moving urgently to install crime prevention systems amid the recent uptick in terror attacks in the country. NEC, having provided several regional police forces with facial recognition tech that has aided in arrests, sees plenty of room to cultivate the market.


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