Canadian IT and business process service provider CGI has offered £1.7bn in cash to acquire Anglo Dutch IT services giant Logica in a sign of continued consolidation.
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There have been persistent rumours that one of the tier-one Indian IT services firms would acquire Reading headquartered Logica to gain a foothold in the UK and Europe, but once again it is a company from North America that is driving industry consolidation.
US firm Information Services Group, which owns sourcing consultancy TPI, acquired UK IT benchmarking firm Compass in January 2011.
A spokesperson at Logica said the businesses are complementary, and due to CGI not having a big European operation, being focused on North America, there is not much overlap.
The board of Logica have recommended the offer to shareholders, who will vote on the deal in July. There would need to be support from over 75% of shareholders.
Robert Morgan, director at sourcing broker Burnt-Oak Partners, said there could still be a counter bid. “This is an okay deal for shareholders, but not a good deal,” he said.
Morgan added that talks between CGI and Logica have been going on for some time.
If the deal is approved, he predicted CGI might have a tough challenge integrating Logica. “My fear is it thinks it will be easy, but there is a very strong Logica culture which will be hard for a new management team,” he said.