News! - BCE, Bell Canada and CGI - this is huge, and golden!
JANUARY 5, 1998
BCE And Bell Canada Increase Investment In CGI, Companies
Strengthen Strategic Alliance
MONTREAL, QUEBEC--
- Agreement in principle to merge Bell Sygma operations into CGI
in exchange for 8.6 million CGI treasury shares
- BCE purchases 6 million outstanding CGI shares
The CGI Group, BCE Inc. and Bell Canada today announced the
purchase by BCE and Bell Canada of additional shares of CGI and an
agreement in principle to further strengthen existing business
relationships between the companies.
As part of the agreement in principle, Bell Canada's existing
systems development operations (Bell Sygma Telecom Solutions and
Bell Sygma International) will be merged with CGI, in exchange for
CGI shares. These operations will become part of a wholly owned,
separately managed subsidiary of CGI. This new subsidiary will
allow CGI to play a major role serving Canadian markets and
international clients in the telecommunications industry. This is
consistent with CGI's objective of establishing a strong presence
in each of its targeted business segments, including the
telecommunications industry.
Agreement in principle to merge Bell Sygma Telecom Solutions and
Bell Sygma International
BCE, Bell Canada and CGI announced an agreement in principle to
merge Bell Sygma Telecom Solutions and Bell Sygma International
operations into CGI in exchange for 8.6 million Series 6 preferred
shares of CGI at $22.98 per share, convertible one for one into
Class A subordinate voting shares.
This agreement includes a ten-year contract according to which CGI
will manage Bell Canada's information services and information
technology operations related to systems development and systems
maintenance.
In addition, Bell Sygma International's operations will also be
merged into those of CGI, potentially representing $100 million in
incremental annual revenue. As a result of these mergers, more
than 3,000 Bell Sygma employees will join CGI and the company's
order book will grow by approximately $3 billion over ten years.
As part of the transaction, Bell Canada and CGI have also agreed
to extend their strategic alliance to a ten-year period. This
alliance provides CGI with significant competitive benefits and
allows the company to bid on a greater number of large scale
outsourcing and systems integration contracts.
Under the terms of the agreement in principle, the majority
shareholders of CGI have the option of exchanging (through a "put
option") 20 percent of their holdings in Class B multiple voting
shares of CGI for shares of BCE over a four-year period, an
additional 30 percent in the fifth year, and the remainder during
the sixth year. After the sixth anniversary, and for a period of
two years after that, BCE has the option to cause the exchange
("call option") of all Class A subordinate voting shares and Class
B multiple voting shares held by the majority shareholders into
shares of BCE. On the sixth anniversary, the multiple voting
shares will become single voting shares. CGI's management remains
unchanged and will retain responsibility for all operations.
This transaction is subject to due diligence, completion of
definitive agreements, regulatory and other required approvals,
and is expected to close by June 30, 1998.
Additional investment by BCE
BCE has agreed to purchase 6 million Class A subordinate voting
shares of CGI at a price of $22.98 per share from Teleglobe
Investment Corp. As a consequence, the previously announced
secondary distribution by Teleglobe Inc. and Teleglobe Investment
Corp. will be reduced to 4,530,400 Class A subordinate shares and
an amended prospectus will be filed shortly with the Quebec and
Ontario Securities Commissions.
"We are very pleased with these strategic developments, which are
in line with our strategic plan objectives that identified the
telecom market as a prime target area," said Serge Godin, CGI's
Chairman and CEO. "This transaction provides CGI with the
expertise, critical mass and resources to become a world-class
player on the international scene."
Following the two transactions, Bell Canada's equity interest in
CGI is at 43 percent. Bell Canada's voting interest stands at 17.9
percent, compared with a combined voting interest of 66 percent
for all holders of Class B shares. Bell Canada will hold three
seats on the Board of CGI, up from two previously. Bell Canada
board representatives will be: Jean Monty, President of BCE; John
Macdonald, Chief Operating Officer, Bell Canada and Louis Tanguay,
President and COO of Bell Canada International.
CGI is the largest Canadian-owned independent information
technology consulting firm. With this latest transaction, CGI will
have more than 7,000 professionals and a revenue-run rate of
approximately $1 billion. The company's backlog will total $4.5
billion. It provides end-to-end IT services and business solutions
to some 2,000 clients throughout North America and
internationally. CGI's shares are listed on the Toronto and
Montreal stock exchanges under the GIB.A symbol. Website address:
www.cgi.ca. |
