INSIDE INFORMATION: Tietoevry to sell its Tech Services business to funds advised by Agilitas Private Equity LLP for EUR 300 million - strategic review of the business concluded

Tietoevry Corporation           INSIDE INFORMATION        23 March 2025   00:13 a.m. EET

Tietoevry has entered into an agreement to divest its Tietoevry Tech Services business to funds advised by Agilitas Private Equity LLP ("Agilitas"). The purchase price for the divested operations amounts to EUR 300 million, of which EUR 70 million is in the form of earn-out payments subject to fulfilment of certain performance milestones in 2026 and 2027 and payable in form of vendor loans. The purchase price will be subject to customary adjustments at closing, including net debt and net working capital adjustments.

The transaction is expected to be closed during the third quarter of 2025, subject to fulfilment of certain closing conditions, including, among others, the receipt of customary regulatory approvals.

This transaction concludes the strategic review of the Tech Services business, which was originally announced on 30 November 2022, and accelerates Tietoevry's transformation towards a leading international software and digital engineering company.

Tietoevry intends to use the transaction proceeds primarily towards the reduction of outstanding debt. Upon completion of the transaction, Tietoevry's Board of Directors may consider additional uses of proceeds, including capital distributions to shareholders.

Tietoevry to focus on software and digital engineering

Upon completion of the transaction, Tietoevry's business portfolio will comprise software businesses Banking, Care and Industry along with the global digital engineering business Create.

"We are very pleased to have reached this agreement with Agilitas. It represents a major milestone in our pursuit to become an international software and digital engineering company, creating higher value for all stakeholders. Backed by Agilitas, Tietoevry Tech Services is well positioned to enhance its proposition to customers and employees and capture market opportunities, building on its leading position in the Nordics. This will be an exciting new era for both Tietoevry and Tietoevry Tech Services", comments Kimmo Alkio, CEO of Tietoevry.

Tietoevry Tech Services serves large Nordic enterprise and public sector customers with primarily an outsourcing business model focusing on cloud, data, applications and infrastructure. The revenue of the business was EUR 1 000.7 million in 2024, and it has 7 230 employees globally.

Tietoevry Tech Services embarking on a new chapter with Agilitas

Agilitas backs defensible businesses and invests in growth to create long-term value. Their team of investment professionals has high consideration of environmental, social and corporate governance factors throughout the investment process and during their stewardship of portfolio companies.

"A new special chapter for Tietoevry Tech Services is unfolding - we are excited and well prepared to embrace it. We remain committed to our core of providing Nordic enterprises and public sector transformative leading-edge services in cloud, data, applications and infrastructure. We want to do our utmost to ensure that our customers always experience our full commitment to their business needs", comments Satu Kiiskinen, Managing Director of Tietoevry Tech Services.

Tor Midsem, Agilitas, comments: "This is an exciting time for the business, which we believe will flourish as a standalone company. We look forward to working with Tietoevry Tech Services' talented employees and to invest in the growth of the business to the benefit of its Nordic enterprise and public sector customers. Tietoevry Tech Services is a great fit with our strategy of backing the management teams of market leaders with long-term customer relationships and unique resources. Agilitas has a strong focus and extensive experience in the IT sector in the Nordic region."

Transaction to have an impact on Tietoevry's reporting

Tietoevry Tech Services will continue as part of Tietoevry Group until the closing of the transaction. Starting from its first-quarter 2025 reporting, Tietoevry will classify the operations that are part of the transaction as held for sale and will report them as discontinued operations. In its segment reporting, Tietoevry will report only continuing operations. Tietoevry will publish restated Group and segment level financial information for 2023 and 2024 prior to publishing its first-quarter interim report scheduled for 29 April 2025.

For illustrative purposes, the transaction would have reduced Tietoevry Group revenue by approximately EUR 920 million based on the 2024 financials, adjusted for expected changes in internal eliminations. Operating margin (EBIT) would have improved while existing Group operations costs, including also those for Tech Services, are impacting Group profitability negatively until the closing of the transaction.

In connection with this transaction, the assets and liabilities of the Tech Services business will be classified as held for sale and will be measured at the lower of the carrying amount and fair value less costs to sell at the end of March in accordance with the applicable accounting guidance (IFRS 5 Non-current Assets Held for Sale and Discontinued Operations). This remeasurement is expected to result in a goodwill impairment, reducing the goodwill held in Tietoevry Tech Services (goodwill of EUR 234 million at 31 December 2024).

The sale of the Tech Services business will have an impact on Tietoevry's guidance for 2025. Tietoevry will issue an updated guidance for the continuing operations in connection with its first quarter interim report.

Tietoevry Tech Services' key figures based on segment reporting in 2024 were as follows:

1) Excludes a non-cash goodwill impairment loss of EUR 200.0 million. As reported, operating loss (EBIT), including goodwill impairment loss, amounted to EUR 139.4 million in 2024.

Advisors

Bank of America Securities acted as an exclusive financial advisor, Roschier Attorneys Ltd. as a legal advisor and PwC as a due diligence advisor to Tietoevry in preparation and implementation of the transaction.

Audiocast for analysts and media:

Tietoevry will hold a teleconference for analysts and media on Monday 24 March at 11 a.m. EET (10 a.m. CET, 9 a.m. UK time). The presentation can be followed on Tietoevry's website.

To take part in the questions and answers session after the presentation you will need to dial in by phone. You can access the teleconference by registering on this link. After the registration you will be provided phone numbers, user ID and a conference ID to access the conference.

The event is recorded, and it will be available on demand later during the day.

For further information, please contact:

Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com

Tommi Järvenpää, Head of Investor Relations, tel. +358 40 576 0288, tommi.jarvenpaa (at) tietoevry.com

Tietoevry Newsdesk, tel. +358 40 570 4072, news@tietoevry.com

Tietoevry Corporation

DISTRIBUTION

Nasdaq Helsinki

Nasdaq Stockholm

Oslo Børs

Principal Media

Tietoevry creates purposeful technology that reinvents the world for good. We are a leading technology company with a strong Nordic heritage and global capabilities. Based on our core values of openness, trust and diversity, we work with our customers to develop digital futures where businesses, societies, and humanity thrive.

Our 23 000 experts globally specialize in cloud, data, and software, serving thousands of enterprise and public-sector customers in around 90 countries. Tietoevry's annual turnover is approximately EUR 3 billion and the company's shares are listed on the NASDAQ exchange in Helsinki and Stockholm, as well as on Oslo Børs. www.tietoevry.com 

About Agilitas Private Equity LLP - www.agilitaspe.com

Agilitas is a pan-European, mid-market private equity firm founded in 2011. Funds advised by the firm invests in high-quality, defensible businesses with opportunities for significant step changes, creating long-term value. Agilitas has a patient, sector-focused approach to investing and a strong track record of growing, improving and strengthening the businesses it backs. Agilitas is experienced at leading IT investments in the Nordic region, having led the buy-out of Danoffice IT, Cibicom and Aeven (previously NNIT IO). In other sectors, Agilitas backed the buy-out of  Reconor and Recover Nordic which expended in Finland with the strategic acquisition of L&T Korjausrakentaminen Oy.