IBM to Acquire KeyMRO, Procurement Services Leader in Europe and North America

Acquisition Strengthens IBM Capabilities in Key Emerging Business Services Market

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PARIS - 13 Dec 2004: IBM announced today that it will acquire the procurement services company KeyMRO from its three shareholders, Schneider Electric, a world leader in power and control, Rhodia, a global specialty chemicals company, and Thomson, a leading provider of technology, systems and services to the media and entertainment industries.

This acquisition enhances IBM's capability to deliver procurement services to clients in both Europe and North America. The strategic sourcing market represents a multi-billion dollar emerging market opportunity. Terms of the deal were not disclosed.

As part of this agreement, Schneider Electric, Rhodia and Thomson have signed 7-year services agreements with IBM for the provision of key procurement services for indirect supplies that will be based on a consistent and consolidated procurement system for all three companies. Indirect supplies include such items as telecommunications, information technology, business travel, office supplies, marketing and advertising, manufacturing maintenance and repair expenses and professional services, among others. They do not include a company's purchase of raw materials.

IBM will integrate the deep process expertise of KeyMRO with its own advanced consulting methodologies and emerging technologies, such as real-time processing, collaboration tools and data integration, enabling IBM to offer real business optimization value to clients in a number of industries. IBM will offer improved procurement services to clients who wish to transform the way they source indirect goods, reduce costs, improve flexibility, improve customer satisfaction and respond to new market opportunities.

"Our clients are increasingly looking for partners that can help optimize and manage their procurement operations over a sustained period. This acquisition will enable IBM to combine its consulting and technology skills with KeyMRO's deep procurement expertise to deliver real transformational business value to clients," said Bill Payne, Vice President, Global Business Transformation Outsourcing, Industrial Sector, IBM Europe. "This represents an emerging business services market opportunity for IBM, and is indicative of the new areas of client relationships that we are developing with these kinds of initiatives."

"The acquisition of KeyMRO by IBM allows us to go a step further regarding the range of services we can offer our clients as we will be able to leverage the combined capabilities of KeyMRO and IBM to provide our clients with procure-to-pay services" said Pascal Albert-Petit, Chairman, KeyMRO.

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