LogicaCMG is attempting to beef up its presence in the consolidating IT services sector by buying Nordic firm WM-data.

The £882m deal will go a long way towards shoring up LogicaCMG’s European presence, as scale becomes a decisive concern for big contract awards.

“The proposed transaction is intended to give LogicaCMG even greater strength and scale to win big global contracts," LogicaCMG said in a statement.

WM-data said the deal fitted it strategy.

“The management team at WM-data were supportive of this merger as it provided a neat solution to both offshoring and internationalisation,” it said in a statement.

“By combining forces, LogicaCMG and WM-data will become one of the largest IT services companies in Europe. Our strong presence in the Nordic region is geographically complementary to LogicaCMG’s strong presence in the UK , France and Netherlands. As the fourth major profit generator for the enlarged group, WM-data will become a significant contributor to the group with the Nordics becoming the largest region by number of people for the LogicaCMG group.”

However, initial market reaction was negative with LogicCMG shares off seven percent.

LogicaCMG was itself created by the merger of Logica and CMG in 2002. Last September, LogicaCMG agreed to buy another large European services group, Unilog of France.

"LogicaCMG is acquiring a regional player that wants access to a larger global-delivery network,” wrote Ovum analysts Phil Codling and Douglas Hayward in a research note.

“The deal would go some way towards closing the gap between LogicaCMG and the likes of Capgemini and Atos Origin (which sold its Nordic outsourcing operations to WM-data last year).

"It's also worth noting that the logic of the deal rests heavily on revenue synergies, not on cost synergies. These can be more elusive than cost synergies, and can take longer to deliver. But if LogicaCMG can lower WM-data's delivery costs (using its global-delivery mechanism) and make its new subsidiary's operations more attractive to Nordic multinational clients by creating a stronger services portfolio and delivering greater pan-European clout, then it stands a chance of raising WM-data's organic revenue growth. "