Logica and CMG To Merge
The all-stock deal - 0.4827 of a new Logica share for each CMG share - values the takeover at £510 million ($793 million). Logica shareholders will own 60 percent of the new entity, to be called (groan) LogicaCMG, while the rest will be owned by CMG's current shareholders. The two companies expect the formal processes to be completed by the end of 2002. The combination of two companies, which have been rivals in the IT services and messaging markets, is the result of a cut in IT spending by corporates and the growing presence of LM Ericsson (Nasdaq: ERICD) and Nokia Corp. (NYSE: NOK) in the messaging world. The two giant Scandinavian vendors have used their carrier relationships to win many of the new multimedia messaging systems deals. Both CMG and Logica were strong players in the SMS systems market, but have failed to make a similar impact with their MMS products. Martin Read, Logica's current CEO, will be top dog at the new firm, which will be listed on the London Stock Exchange and possibly at Euronext in Amsterdam. CMG is an Anglo/Dutch company.
LogicaCMG will instantly become the second largest IT services in Europe, according to the duo, with a "pro forma combined turnover of over £2 billion [$3.12 billion] for the 12 months ended 30 June 2002." As a result of the corporate marriage, about 6 percent of the workforce, 1,400 jobs or so, will be cut. Logica believes these cuts will save the new firm about £60 million ($93.7 million) per year by the end of 2004. For an exhaustive amount of detail on the merger, point and click here. — Ray Le Maistre, European Editor, Unstrung