Canada's CGI to buy Logica to create global IT firm
By Paul Sandle and Euan Rocha
LONDON/TORONTO (Reuters) - Canada's top IT services firm, CGI Group Inc, agreed to buy larger Anglo-Dutch rival Logica Plc for $2.64 billion on Thursday, a move that more than doubles its size and helps serve multinational clients in Europe.
The deal, funded with debt and a C$1 billion ($965.44 million) cash infusion from CGI's largest shareholder Caisse de dépôt et placement du Québec, will allow the Montreal-based company to cater to its many North American clients that also do business in Europe.
CGI's chief executive, Michael Roach, played down concerns about expanding into Europe at a time when euro zone countries are mired in economic woes.
"The vast majority of Logica's revenue is derived from Europe's largest economies - these include the UK, Germany, France and the Nordics, which are attractive markets," he told analysts on a conference call.
A sale of Logica would be the latest in a trend of British technology groups being snapped up by richer North American rivals. Banking IT company Misys is being bought by private equity group Vista, and last year U.S. technology giant Hewlett Packard Co acquired software company Autonomy.
Shares of CGI were up 12.3 percent at C$23.60 on the Toronto Stock Exchange at midday Thursday as investors cheered the deal. Its U.S. shares were up 11.7 percent at $22.81 on the New York Stock Exchange.
Logica's shares, which were valued at 139 pence a year ago, were up 69 percent at 109.5 pence at 1552 GMT, trading above the offer price on hopes of a rival bid emerging.
The Logica deal will more than double CGI's annual revenue and number of employees, taking sales to about $10.4 billion and staff numbers to 72,000 in 43 countries, CGI said. Continued...