CGI AND TELEGLOBE COMPLETE INSURANCE SYSTEMS GROUP TRANSACTION
Bell Canada purchases $43.7 million of first preferred shares, series 1 of CGI to maintain its level of equity interest
The CGI Group Inc. and Teleglobe Inc. announced today that they have completed the transaction through which CGI has acquired Teleglobe's Insurance Systems group, effective October 22, 1997.
CGI acquired Teleglobe's Insurance Systems group for $20 million cash plus $120 million in shares, consisting of 5,265,200 first preferred shares, for an aggregate consideration of $140 million. These shares carry one vote per share and are convertible one for one into Class A subordinate shares at any time at the option of the holder. Such conversion right has been exercised upon completion of the transaction, on October 22, 1997.
Related to the transaction, Bell Canada, which acquired an equity interest in CGI in November 1995, elected to exercise the anti-dilution rights which were negotiated as part of its business partnership with CGI, in order to maintain its equity interest at 23.81%. Accordingly, Bell Canada has purchased 2,189,108 first preferred shares, series 1 of CGI for an aggregate price of $43.7 million.
As a result of these transactions, CGI's shareholders' equity grew by $163.7 million and the company has a cash position of $10 million with no debt. Following Bell Canada's share purchase, Teleglobe will have an 18.47% equity interest in CGI.
"This acquisition is very strategic for us," said Serge Godin, CGI's Chairman and CEO. "It broadens and strengthens our position in the fast growing financial services industry and provides a solid foundation for CGI to grow in the important U.S. market, with emphasis on the outsourcing industry.
"We view Bell Canada's decision to maintain its level of equity interest as a strong vote of confidence in a business partnership which is providing significant benefits to all parties -- Bell, CGI and our clients," Mr. Godin added.
Teleglobe's Insurance Systems group is the third largest IT outsourcer and business solutions provider to the property and casualty insurance industry in North America and the largest in Canada. With headquarters in Andover, Massachusetts, it generates about 56% of its revenues in the U.S., 38% in Canada and 6% overseas. It has offices in the U.S., Canada and the UK and employs approximately 900 people, of which 300 are in Canada.
CGI is the largest Canadian-owned independent information technology consulting firm. As a result of this latest transaction, CGI employs 3,600 professionals and has a revenue-run rate of $525 million and an order backlog valued at over $1.35 billion. It provides end-to-end IT services and business solutions to more than 2,000 clients throughout Canada, the U.S. and elsewhere in the world.
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