LogicaCMG, the Anglo-Dutch IT services group, plans to return £130 million to investors through a share buy-back after selling its SMS text messaging business to a private equity consortium led by Atlantic Bridge Ventures for £265 million in cash.

The telecoms products unit, which will be renamed Acision, is the world’s largest provider of the software, hardware and integration services that form the infrastructure behind SMS text messages, regarded as a cash-cow for the telecoms industry.

Brian Long managing partner at Atlantic Bridge, said: “This was a high growth products business locked in a services company.”

He said Acision will focus on Asia, South America and the US, where take-up of SMS messaging is growing faster than in the mature European market. He added the group plans to use its footprint in SMS, where it supplies some 300 companies including mobile giants Vodafone and Cingular, to expand into areas such as mobile video.

Atlantic’s investment in Acision is being overseen by Larry Quinn, the former chief executive and chairman of the then Logica Mobile Networks from 1997 to 2003. The consortium is 50 per cent supported by Access Industries, the privately held US-based holding company founded by American industrialist Len Blavatnik. Dermot Desmond’s private equity vehicle, International Investment and Underwriting also has a stake.

The telecoms products unit, which employs approximately 1,700 people across 22 countries, reported operating profits of about £14 million last year on revenues of about £255 million. Acision has said it has no plans to cut jobs.

Analysts at UBS, the broker, wrote in a note that the price was in line with market expectations and that investors in Logica “will welcome the removal of a low visibility (and in the eyes of many) non-core, unit.”

Logica said the sale would help it focus on expanding its IT services business. The group is the 12th largest IT services company in Europe and has spent about £1.8 billion on acquisitions over the past 18 months as it strives to become a top-ten global player.

It added that after the buy-back, Logica said it will use the remainder of the money from the sale to reduce debt and buyout minority shareholders in WM Data, the Swedish-based group it acquired for £882 million in August, to capitalise on its growing presence in Europe.

Jean Charles Doineau of Ovum, the telecoms analysts, said that while the SMS business would be attractive for its capacity to generate cash, Acision could face difficulties in moving into new areas such as video.

He said: “SMS remains a wonderful cash machine, but while having a connected sales team might make sense, SMS and data-related services such as video are distinct areas in terms of technology.”

Martin Read, Logica chief executive, said: “Over the last two years, we have significantly improved the profitability of the telecoms products business and developed a new product range. We have now secured an attractive sale price for the strengthened business."

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