CGI to acquire Teleglobe's Insurance Systems Group
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: THE CGI GROUP INC. TSE, ME SYMBOL: GIB.A
AUGUST 11, 1997
CGI Signs Letter of Intent with Teleglobe to Acquire its Insurance Systems Group
MONTREAL, QUEBEC--The CGI Group Inc. (GIB.A) today announced that
it has signed a letter of intent to acquire the Insurance Systems
group of Teleglobe Inc. effective September 30, 1997, subject to
due diligence and usual regulatory approvals.
Teleglobe's Insurance Systems group is the third largest
outsourced supplier of processing services to the property and
casualty insurance industry in North America and the largest in
Canada, with revenue for the last 12 months of $163.5 million and
a current revenue run rate based on latest quarterly results of
approximately $185 million. It generates about 56 percent of its
revenues in the U.S., 38 percent in Canada, and 6 percent
overseas.
"This acquisition is our largest to date and, if completed, will
prove strategic for CGI," said Serge Godin, Chairman and CEO. "It
broadens and strengthens CGI's position in the fast growing
financial services industry, adding leadership in the property
and casualty insurance sector to our existing leadership in the
banking and life insurance sectors. It provides a solid
foundation for CGI to grow in the important U.S. market, with
emphasis on outsourcing business, and significantly increases our
revenue base. The operations being acquired are well managed,
profitable and represent an excellent fit for CGI."
CGI is acquiring Teleglobe's Insurance Systems group for $20
million cash plus $120 million of first preferred shares, valued
at $45.58 per share on a pre-split basis, carrying one vote per
share and convertible one-for-one into Class A subordinate shares
not earlier than six months after the closing date. (CGI's shares
are being split 2-for-1 effective August 12, 1997.)
The U.S. operations of Teleglobe's Insurance Systems group provide
the U.S. property and casualty insurance industry with specialized
computer processing services and applications software, serving a
customer base made up of over 120 companies including 14 of the 25
largest insurers and over 100 agents and brokers.
The Canadian operations offer full service computer processing
facilities, as well as software and information services, to over
70 property and casualty companies and approximately 1,200
insurance brokers. The group's overseas operations sell and
support proprietary business solutions for personal insurance,
mostly in Europe. The group is headquartered in Massachusetts, and
employs approximately 900 people, including 300 in Canada.
The acquisition would increase financial services as a percentage
of CGI's overall revenues to approximately 58 percent, from 35
percent currently. CGI has been active as a supplier to the
insurance industry, with its proprietary business solution for
claims management.
CGI is the largest Canadian owned independent information
technology consulting firm. Before taking into account the effect
of the proposed acquisition, CGI has 2,900 professionals, a
revenue run rate of $300 million, and an order backlog valued at
over $1 billion. It provides end-to-end IT services and business
solutions to more than 1,800 clients throughout Canada and
elsewhere in the world. |
