Looks like the efforts to reposition finally paid off (note the thread title: "IMRS A Y2K FIRM SUCCESSFULLY REPOSITIONING ITSELF")
Wednesday February 21, 6:20 pm Eastern Time
CGI offers $438 million for IMRglobal
(UPDATE: Recasts throughout, changes dateline, previous TORONTO, figures in U.S. dollars)
By Charles Grandmont
MONTREAL, Feb 21 (Reuters)- CGI Group Inc. (Toronto:GIBa.TO - news) took its biggest acquisition bite yet on Wednesday, announcing it would buy U.S.-based IMRglobal Corp. (NasdaqNM:IMRS - news) in a $438 million deal that will boost its international presence in information technology consulting and computer systems integration.
CGI will offer 1.5974 class A shares for each IMRglobal share, which is a 45% premium over the closing price of IMRglobal shares last Friday, based on the average price of CGI's shares in the last five weeks, the company said.
CGI shares slid 22 percent after the announcement on the New York Stock Exchange on Wednesday, bringing the value of the deal to around $336 million.
CGI, 30 percent owned by Canadian telecoms conglomerate BCE Inc. (Toronto:BCE.TO - news), said the acquisition will give it enough clout to court large U.S. corporations wishing to outsource maintenance and management of their computer systems.
IMR had $256 million in revenue in fiscal 2000, compared with about $933 million for CGI, which is Canada's largest independent computer consulting firm. IMR warned of weaker fourth-quarter earnings at the end of January because of an economic slowdown in the United States.
CGI also said the deal will expand its reach into the high growth markets of health care and financial services in the U.S. and give it a toehold in France, India, Japan and Australia.
The deal should add about 3,000 employees to CGI's current workforce of some 10,000, but CGI's chief executive, Serge Godin, said it was too early to estimate how many jobs would fall victim to the quest for synergies.
CGI said it expects the transaction, set to close at the end of April or early May, to add slightly, or have a neutral effect, on its cash earnings per share, excluding the amortization of goodwill.
In a conference call with analysts, Godin said that was a ``very conservative'' outlook. ``We don't want to be in a position to overpromise and underdeliver,'' he said.
IMRglobal chairman and chief executive Satish Sanan has agreed to tender his 27.6 percent of the 44 million shares outstanding and IMR's board of directors has agreed unanimously that the takeover offer is fair, CGI said.
CGI's majority shareholders have agreed to exercise their right to maintain their current level of class B multiple voting shares after the acquisition, while BCE has decided not to acquire additional class A shares and is still deciding whether to acquire additional class B shares, CGI said.
Godin and CGI chief financial officer Andre Imbeau will acquire additional class B shares at $5.95 a share for a total value -- depending on BCE's decision -- ranging between $36.5 million to $46.6 million.
CGI's shares closed $1.25 lower at $4.35 on the New York Stock Exchange on Wednesday. The stock was trading as high as $24.50 in December 1999, before sliding to a low of $3.44 a year later.
IMRglobal shares finished up 1/32 at 6-9/16 on Nasdaq on Wednesday. The stock has traded in a 12-month range of $2-6/16 and $19-3/16.
($1 equals $1.54 million)
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