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Electricity — SAIC Eyes $600M Scottish Venture

The United Kingdom is about to become more E-enabled via a deal between one of the largest utilities there and Science Applications International Corp.

Last week, San Diego-based SAIC was expected to form a joint venture with Scottish Power that will be a global E-business service provider for the utility sector.

The 50-50 joint venture , which will be headquartered in Glasgow, Scotland, with about 600 employees , is valued at $600 million. The new company will be called Calanais, named after an ancient Celtic stone circle, though spelled differently.

Calanais will not only bring E-commerce to the U.K. utility industry, but it is also expected to increase competition in a relatively new deregulated market.

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At least a dozen U.K. utility companies have been fiercely competing for customers since 1998.

“It’s a completely different ballgame when you have to break down the barriers and offer the customers access to alternatives to your own supplies,” said Gordon Laidlaw, an information officer for Scottish Power, an $11 billion company that supplies one in five households in Britain with electricity, gas, water or telecommunications services. “So, you can imagine what sort of demand that makes on your IT business.”

That’s where SAIC comes in, Laidlaw said.

Universal Template

“They already have a familiarity with the U.K. market,” he said. “The template they provide is a universal one. We are two years behind on the Internet than the United States. (SAIC) has been able to take more advantage of that wave.”

Paul Levi, corporate vice president and sector controller for SAIC, said there is great potential for E-business in the U.K.’s utility sector. He said the information technology market for utilities in the U.K. and Europe exceeds $10 billion.

“I believe the market is substantial and has a great deal of ability to be absorbed in Europe and the U.K, as we’ve seen in the U.S. with digitization and exchanges being built like business-to-business,” Levi said.

This is not SAIC’s first utility deal. Last year, SAIC signed a $400 million IT services agreement with Entergy, a major global energy company based in New Orleans.

SAIC, which reported record revenues of $5.5 billion for fiscal 2000, also has a joint venture called Intesa with Petr & #243;leos de Venezuela, S.A., a worldwide oil industry leader.

The joint venture with Scottish Power, meanwhile, raises SAIC’s profile in the Scottish community as a significant provider of IT professional services, Levi said.

‘Well Positioned’

“I believe we’re well positioned to supply a significant value to Scottish Power and to jointly expand in a growing and changing marketplace,” he said. “I think we’ll have a lead role by being a significant partner in the continuing advancements the U.K. is making in deregulation.”

Besides the U.K. and continental Europe, Calanais plans to target the North American utility market.

Scottish Power already has a presence in the United States. Last year, the utility giant merged with Portland, Ore.-based PacifiCorp., marking a first-of-a-kind partnership between utilities in the United States and the U.K.

The two companies combined have a market capitalization of $17 billion, with 7.5 million customers across the western United States, the U.K. and Australia.

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