CGI AND IMRGLOBAL ENTER INTO MERGER AGREEMENT
CGI Group will hold an analyst conference call on Wednesday, February 21, 2001 at 2:00 p.m. Eastern Standard Time. To access the call, please dial 1 888 811 8679. This conference call will be broadcast live on the CGI Web site, at www.cgi.ca where it will be archived. It will also be available for replay at 1 800 558 5253 (ref. number 18054253).
CGI Group Inc. (NYSE:GIB; TSE:GIB.A) and IMRglobal, Corp. (Nasdaq: IMRS), announced today the signing of a definitive merger agreement providing for the acquisition by CGI of IMRglobal for US$438 million. Canadian-based CGI is among the leading information technology services providers in North America and US-based IMRglobal is a leading IT consulting and systems integration company with a unique, cost effective business delivery model.
- Provides respective clients with greater depth and breadth of services around the world;
- Significantly increases CGI's systems integration and high-end consulting capabilities in the US and UK, while providing a presence in France, India, Japan and Australia;
- Provides the critical mass to position CGI as a full IT services outsourcing player in the large US outsourcing market;
- Strengthens expertise and presence in CGI's vertical markets, particularly in the financial services sector and fast growing healthcare industry in the US;
- Provides a unique delivery model which brings high quality, cost effective client support through IT services operations in Mumbai, as well as in Bangalore, the high technology centre of India;
- Adds strong management and IT professionals in the US and international markets.
Under the terms of the definitive agreement, IMRglobal shareholders will receive 1.5974 Class A Subordinate Shares of CGI for each share of IMRglobal Common Stock. Based on the average closing price of CGI Class A Subordinate Shares for the 25 trading days through February 16, 2001 on the New York Stock Exchange, the exchange ratio represents an implied price of approximately US$9.50 per IMRglobal share, for a premium of 44.8% over the closing price of IMRglobal's shares on Nasdaq on February 16, 2001. The transaction, which will be accounted for under the purchase method of accounting, is expected to be generally tax free for most IMRglobal shareholders.
The transaction is expected to be neutral to slightly accretive to CGI on a cash EPS basis.
CGI's majority individual shareholders have decided to exercise their pre-emptive rights pursuant to the articles of incorporation of CGI in respect of the merger, in order to maintain their Class B voting interests at current levels. BCE Inc. has decided not to exercise its pre-emptive right to acquire additional Class A Subordinate Shares and has indicated to CGI that it will decide prior to closing of the merger whether or not it will exercise its pre-emptive right for Class B Shares (Multiple Voting). Serge Godin and André Imbeau will acquire additional Class B Shares (Multiple Voting) at an issue price of US$ 5.95 per share, for a total value that may vary, depending on BCE's decision, from US$ 36.5 million (CDN$54.8 million) to US$46.6 million (CDN$69.8 million).
With the completion of this transaction, CGI will have close to 13,000 employees in more than 60 offices in 24 countries, serving more than 3,000 clients in North America, Europe and Asia.
IMRglobal support for the transaction
The chairman and CEO of IMRglobal, Mr. Satish K. Sanan, who owns, directly and indirectly, 27.6% of the outstanding shares of IMRglobal, has agreed to support the transaction at the special shareholders' meeting. The Board of Directors of IMRglobal has unanimously determined that the merger is fair to and in the best interests of the shareholders of IMRglobal, and has resolved to recommend to shareholders that they approve the merger. The IMRglobal board of directors has received an opinion from its financial advisor, Updata Capital, to the effect that the exchange ratio in the merger is fair, from a financial point of view, to IMRglobal shareholders.
Commenting on today's announcement, Serge Godin, chairman, president and CEO of CGI said: "IMRglobal will significantly increase CGI's systems integration and high-end consulting capabilities in the U.S. and UK, while providing us with a new presence in France, India, Japan and Australia. It will provide the critical mass to position CGI as a full IT services provider in the US, the largest outsourcing market in the world."
"We see an excellent fit between the two companies. The acquisition of IMRglobal will strengthen CGI's expertise and presence in our targeted vertical markets, particularly in financial services and the fast growing healthcare industry in the US. It significantly broadens our client base, as there is little overlap between our lists of Global 2000 companies. There are excellent cross-selling opportunities which will enable CGI to offer a broader range of end-to-end IT services."
"IMRglobal provides a unique delivery model which brings high quality, cost effective client support through IT services operations in Bangalore and Mumbai."
"Overall, this acquisition will provide our clients with greater depth and breadth of services around the world. By leveraging IMRglobal's leading-edge skill set and its unique offshore delivery model, CGI will be able to accelerate its progress toward becoming a major North American IT services provider with a global reach."
Satish K. Sanan, chairman and CEO of IMRglobal, said: "We are delighted to be joining forces with a company that shares IMRglobal's quality culture, entrepreneurial values and overall client focus. This combination creates a truly international IT services provider with recognized strengths in high value-added IT applications management and development, e-business, and a strategy that focuses on serving clients in well defined industry sectors. I am very excited about the prospect of making my personal contribution to the further development of the company and I look forward to the stimulating challenges that lie ahead."
"The board and management of IMRglobal believe that this transaction is in the best interests of all shareholders as the combined operations will provide greater value than either company taken separately."
Completion of the transaction is subject to customary conditions, including satisfaction of regulatory requirements, clearance under the Hart-Scott-Rodino Antitrust Improvements Act and the Competition Act (Canada). It also is subject to the approval of IMRglobal shareholders at a special meeting, by resolution adopted by the majority of the outstanding shares. Closing of the merger is expected in spring 2001.
Based on the approximately 44 million IMRglobal shares outstanding, the transaction has a total value of US$438 million, including assumption of the debt. Any outstanding options to purchase common shares of IMRglobal not exercised prior to the closing of the merger will be assumed by CGI and rolled over into options to purchase CGI Class A Subordinate shares.
Salomon Smith Barney has acted as financial advisor to CGI as part of this transaction. All Canadian and US dollar amounts reflect an exchange rate of 1.53 Canadian dollars to each US dollar.
IMRglobal is a leading global provider of end-to-end information technology solutions to Fortune 500 and Global 2000 companies in key vertical industries: financial services including insurance, banking and capital markets; healthcare and government; and commercial services, including utilities, retail, and manufacturing and distribution. IMRglobal's services include business consulting, e-business, software development, application maintenance and professional services. The company had audited revenue of US$256.2 million (CDN$394 million) in fiscal 2000. For more information on IMRglobal, visit www.imrglobal.com.
Founded in 1976, CGI is the largest independent Canadian information technology consulting firm and one of the largest in North America with revenue in fiscal 2000 of US$911 million (CDN$1.4 billion). CGI's order backlog totals approximately US$4.6 billion (CDN$7.0 billion). CGI has 10,000 professionals and provides end-to-end IT services and business solutions to 2,500 clients in Canada, the United States and more than 20 countries around the world. CGI's shares are listed on the New York Stock Exchange (GIB), as well as on the Toronto Stock Exchange (GIB.A). They are included in the TSE 100 Index as well as the S&P/TSE Canadian Information Technology index. Web site: www.cgi.ca
Investors are urged to read the relevant documents that will be filed with the US Securities & Exchange Commission (SEC) by CGI Group Inc. and IMRglobal, Corp. in connection with the merger because they will contain important information, including the identities of the participants in any solicitation of proxies or consents from IMRglobal, Corp. shareholders and a description of such participants' interests in any such solicitation. You will be able to obtain a free copy of the documents filed with the SEC by CGI Group Inc. and IMRglobal Corp. at the SEC's website, www.sec.gov. CGI Group Inc. and IMRglobal, Corp. investors will also be able to obtain a free copy of the relevant documents by contacting CGI:
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include (but are not limited to) those identified by the use of the words "anticipate," "believe," "estimate," "expect," "intend," and similar expressions. These forward-looking statements represent CGI Group Inc.'s and IMRglobal, Corp.'s current intentions, plans, expectations, and beliefs, and are subject to risks, uncertainties, and other factors, of which many are beyond the control of CGI Group Inc. or IMRglobal, Corp. These factors could cause actual results, performance or achievements of CGI Group Inc. or IMRglobal, Corp. to differ materially from such forward-looking statements.
These factors include and are not restricted to the timing and size of contracts, acquisitions and other corporate developments and merger and acquisition strategy, the ability to attract and retain qualified employees, market competition in the rapidly-evolving information technology industry, general economic and business conditions, variability in operating results, potential cost overruns on fixed-price projects, and other risks identified in CGI Group Inc.'s annual or periodic reports or Forms 40-F (including the risks described in the Management's Discussion and Analysis (MD&A)) filed with the US Securities & Exchange Commission, CGI Group Inc.'s Annual Information Form filed with Canadian securities commissions, and IMRglobal Corp.'s periodic filings with the SEC under the Securities Exchange Act of 1934. All of the risk factors included in these filed documents are included herein by reference. The forward-looking statements included in this document are made only as of the date of this document. CGI Group Inc. and IMRglobal, Corp. each disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
- 30 -
Director, investor relations
Director, media relations
Executive vice-president and chief administrative officer