French computer services company, Cap Gemini SA, has announced a $1.24bn bid for total ownership of its most successful subsidiary, Cap Gemini NV, based in Holland. Cap Gemini currently holds 56.4% of the Dutch company. It will offer four of its shares for nine Cap Gemini NV shares, creating up to 8.5 million new shares, equivalent to an increase of more than 12% in the total shares outstanding.
The bid will be launched on June 25, pending approval from the Dutch stock exchange. Cap Gemini said the acquisition is needed to improve international coordination of its operations. Whenever we try to mobilize [our Dutch subsidiary], we have to justify that we are not hurting the minority shareholders interests, Paul Hermelin, president of Cap Gemini SA told the Wall Street Journal. Hermelin said this made moves quite slow and somewhat difficult.
By acquiring all of Cap Gemini NV, the company will be free to deploy personnel from its Dutch unit to assist the parent company’s effort to expand in Germany, said Hermelin. He added that the group would also be better placed to tap Cap Gemini’s specialist expertise in the retail sector.
The bid represented a 28.1% premium to Cap Gemini’s weighted average share price on June 15, and comes just over two months after Cap Gemini announced the $200m acquisition of Beechwood, a US computer services company serving the North American telecoms market (CI No. 3637).
Earlier this year, the rapidly-growing company – and the only European services company in the global services top ten – reported 1998 net income of $195m, against $120m the previous year (CI No 3613). Consolidated revenue grew 28% to $4.1bn.
