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Gold/Mining/Energy : CGI Group (GIB.A) - -- Ignore unavailable to you. Want to Upgrade?

To: Fouad Nahas who wrote (146)	12/19/1997 9:31:00 PM
From: BM	Respond to of 1673

Geoffrey Rowan on Teleglobe/CGI in Globe & Mail of December 19, 1997 Tech Services company stands to benefit from move, analysts say. Teleglobe Canada Inc. will sell all of its shares of Montreal-based CGI Group Inc. for $252.7-million, more than twice what it paid for them just three months ago. CGI officials and some of the analysts who follow the technology services company said the sale is good news for CGI because it increases CGI's float -- the number of shares available in the public market -- by close to 50 per cent. "That's always good for a company," said one analyst, who spoke on condition of anonymity. "It makes it more liquid, easier to trade in and out of." But the big sale -- a bought-deal led by Scotia Capital Markets, Levesque Beaubien Geoffrion Inc. and Nesbitt Burns Inc. apparently had some investors worried that CGI's shares had peaked. The shares closed down $1.30 at $23.75 on the Toronto Stock Exchange. "It's not that we didn't think CGI would continue to grow," said Teleglobe chief financial officer Claude Seguin. "Indeed, it's because we think it's going to continue to grow that we've been able to sell this big amount of shares today. Stock and technology analysts agreed with Mr. Seguin's prognosis for CGI. Some stock analysts said trading in CGI shares may have been a little enthusiastic lately, but added that the company is well poised to expand faster than its booming market sector. "I think their potential is explosive," the stock analyst said. "They have not yet reached the top of where they could be in their market. Every sector they are in is growing. They are growing, and the industry is consolidating." CGI, and most of the world's technology services sector, is benefiting from conditions that have made it a sellers' market, said Keith Ellis, a technology analyst with the Toronto-based consulting firm International Data Corp. Canada Ltd. That's because organizations are facing a number of technological challenges. Many have concluded, for example, that trying to build and run large computer systems on which to run their businesses is an expensive distraction, and so they are outsourcing the work, hiring companies such as CGI to do it for them. CGI is particularly well positioned for outsourcing contracts, and the nature of that work makes revenue more reliable because contracts tend to stretch over several years. Montreal-based Teleglobe, an international long-distance telephone company, acquired the CGl shares as a result of a deal announced last August, in which CGI bought the insurance systems unit of Teleglobe for $20-million in cash and $l2O-million in preferred shares. That deal, the the largest acquisition in CGI's 21-year history, closed in October. It boosted CGI's annual revenue to about $500-million from roughly $300-million. Teleglobe's Mr. Seguin said his company has not decided how it will spend the money from its CGI stock sale. Teleglobe shares closed down 20 cents at $46.30 on the TSE yesterday.