CGI swoops in with £1.7bn bid for UK’s Logica

LOGICA shares soared by 69 per cent yesterday after CGI Group Holdings offered to pay £1.7bn in cash to buy the computer services company.

CGI, a Canadian IT company, said the 105p per share offer represented a 59.8 per cent premium to Logica’s closing share price on Wednesday.

The deal has garnered unanimous support from Logica’s directors and irrevocable undertakings from Schroder and Artemis, the British company’s biggest shareholders who collectively own an 18 per cent stake.

Both funds reserved the right to withdraw their support if an offer higher by 10 per cent comes along – an outcome which some analysts have pegged as likely, particularly since Logica’s shares jumped to almost 6p above CGI’s offer price.

George O’Connor at Panmure Gordon said, “Logica is one of the cheapest IT service companies, and even at acquisition multiples it is attractive enough to flush out another buyer. The potential buyers are numerous (start at IBM, or Accenture and just walk down the list).”

But Paul Morland at Peel Hunt disagreed, saying: “The bid looks opportunistic but has been agreed and is unlikely to be countered in our view.”

Logica is the third British tech company to be bought by an American company in the last year.

HP bought Autonomy last October for £6.2bn, and private equity firm Vista offered £1.27bn for Misys earlier this year.

O’Connor said CGI’s bid “may well mark the beginning of the end of a fraught road for Logica shareholders, who have seen value destroyed over the past years.”

In the past 12 months, Logica shares have lost more than half of their value following two profit warnings.

CGI said it has received debt funding from Canadian Imperial Bank of Commerce, National Bank of Canada and The Toronto-Dominion Bank financed the acquisition.