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Euroscript Buys Foreign Exchange Translations and Increases Presence in the U.S. Market
Posted by Donald A. DePalma on May 18, 2015  in the following blogs: Market Data, Supplier Business Issues, Business Globalization
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Luxembourg-based euroscript International (#7 on CSA Research's 2014 list of the largest LSPs) announced today that it acquired Foreign Exchange Translations (FXTrans), a U.S.-based specialist in medical translations. The deal will close by the end of May 2015.

In a press release, euroscript CEO Mark Evenepoel said that the two companies complement each other in terms of clients, product and service offerings, and market penetration in key geographical areas. The press release also cited the "unique offering" allowed by the combination of FXTrans with Infotehna, euroscript's business unit dedicated to life sciences information management. We asked Evenepoel about the company's global growth strategy, plans for specific markets, and the life sciences offering that euroscript reinforces with this purchase. As is always the case with deals involving private companies, the price tag cannot be released.

  • Does this acquisition signal euroscript's strategy to enter the U.S. market? Evenepoel said that, "Life science companies are more global than ever, needing support in all regions where they operate -- Europe, Asia, and the United States. We must address the characteristics of the respective headquarters or business leads." However, the company's interests in the U.S. market extend beyond life sciences. Evenepoel told us that his goal is "to strengthen American operations to better support U.S.-headquartered business in different industries." More specifically, he told us that euroscript was aiming for a distribution of business to match the global market, meaning that he "would expect U.S. business to represent 30-35% of euroscript's revenue in the mid-term." FXTrans's U.S.-generated revenue provides a strong step in that direction.

  • Will euroscript expand its Asian operations? With the FXTrans announcement of an office in Singapore just two weeks ago, we asked about euroscript's growing presence in Asia.  Evenepoel told us, "We successfully developed subsidiaries in China -- in Suzhou, Shanghai, and Hong Kong -- and in Chennai in India." Missing from the list was Japan, where FXTrans has a partnership with ASCA. He told us that, "Japan is another important cornerstone in our joint development. We are in the process of looking to integrate more Asian LSPs," but ASCA is not part of this acquisition. Both China and Japan represent growth markets for life sciences, due to a variety of economic, demographic, and investment factors.

  • How does FXTrans relate to Infotehna? Acquired last year, Infotehna provides software to manage regulated content and processes for the life sciences sector, as well as regulatory compliance solutions. FXTrans provides translation services for the sector. We asked how euroscript will meld these two units. "Our strategy is to market a range of content management solutions addressing industry processes and the related content life cycle challenges," Evenepoel told us. "For life sciences we offer a business process combining technology and services: compliance management solutions, consulting and system integration, translation, authoring, and linguistic validation." Euroscript's full-service life science offering will compete with marketing powerhouses such as TransPerfect with its specialized Crimson life sciences unit in the U.S. market.

This acquisition fits three trends we identified in our research:

  1. A move upstream to show more business value. The most ambitious language service providers have been pushing beyond the boundaries of the language industry with the goal of being viewed as more than suppliers of bulk translation. Firms such as euroscript, Lionbridge, and SDL have been seeking corporate roles in areas such as marketing communications, customer care, and other critical business processes. With this acquisition, euroscript bolsters its ability to offer a beginning-to-end solution for the life sciences sector.

  2. A focus on growing vertical markets. Euroscript's solution involves strong software solutions optimized for content management and life sciences expertise. In our advisory and consulting sessions with LSPs, we emphasize the importance of targeting strong verticals. For example, the last year has seen M&A activity around support for industrial manufacturing (Argos for SH3) and European finance (Lionbridge for CLS and Welocalize for Agostini).

  3. Expansion into strong and growing markets. The last few years have seen a lot of cross-border activity. Euroscript itself bought companies in the Netherlands, Slovenia, and now the United States.  Lionbridge crossed the Swiss and Canadian borders for purchases, Argos went outside Poland into the U.S., while Welocalize turned to Italy. With the purchase or FXTrans, euroscript has laid out its strategy to address its thus far slight presence in the United States and increase its operations in China and Japan, thus adding three of the world's largest economies to its strong base in Europe.

The bottom line: Euroscript represents one of several LSPs in a strong position to further consolidate the market. Combined with venture capitalists (VCs) and private equity groups (PEGs) that periodically ask for our advice about with plans to roll up the many players on the market, CSA Research sees a continuing race to buy up the most valuable properties in the language services market. At the same time, software solutions to automate operations and marketplaces that provide e-commerce-style buying experiences for translation offer these growing LSPs both the tools and competition to address the planet's growing need for translation and business process outsourcing for global content needs.


 

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