Montreal, Quebec, May 26, 1998


  • Bell Canada outsourcing contract estimated at $4.5 billion over 10 years
  • Acquisition of Bell Sygma Telecom Solutions and Bell Sygma International
  • Special shareholders' meeting set for June 29, 1998

The CGI Group today announced the signing of definitive agreements regarding its previous announcement to further strengthen its existing business relationship with BCE Inc. and Bell Canada. The agreements are conditional only on the approval of CGI's shareholders at a special shareholders' meeting to be held in Montreal on June 29, 1998. The Information Circular for the meeting will be mailed to shareholders this week.

"The due diligence went very well, and pending shareholder approval we will meet our June 30, 1998 target date for finalizing the transaction," said Serge Godin, Chairman and Chief Executive Officer. "This multi-faceted agreement guarantees significant growth for CGI. It provides CGI with the expertise, critical mass and resources to be a world-class IT services player internationally in the telecommunications sector -- one of CGI's selected economic sectors."

As part of the agreement, CGI will manage Bell Canada's IT systems development and maintenance previously managed by Bell Sygma Telecom Solutions, and acquire both Bell Sygma Telecom Solutions and Bell Sygma International. This agreement is consistent with CGI's objective of establishing a strong presence in the telecommunications industry.

CGI estimates the outsourcing contract with Bell Canada at $4.5 billion. This represents the largest outsourcing contract ever in Canada, and among the five largest in North America. In addition, Bell Sygma International operations which will be acquired by CGI represent $80 million in incremental annual revenue.

CGI will acquire these operations in exchange for 17.2 million of its First Preferred Shares, Series 6, at  $11.49 per share reflecting the two-for-one share split effective May 21,  1998, convertible one for one into Class A subordinate voting shares for an aggregate amount of $197.6 million. Conversion will take place immediately after completion of the transaction.

As part of the transaction, Bell Canada and CGI have also agreed to extend their strategic alliance to June 30, 2008. This alliance provides CGI with significant competitive benefits and allows the company to bid jointly with Bell Canada on a greater number of large scale outsourcing and systems integration contracts.

Following the transaction, Bell Canada's equity interest in CGI will be 42% and its voting interest will be at 17.8%, compared with a combined voting interest of 64% for all holders of Class B shares. Bell Canada will hold three seats on the Board of CGI, up from two currently. Bell Canada board representatives will be: Jean Monty, President and CEO of BCE; John MacDonald, President and Chief Operating Officer, Bell Canada and Louis Tanguay, President and Chief Operating Officer of Bell Canada International.

Under the terms of the agreement, the majority shareholders of CGI have the option of exchanging (through a "put option") 20% of their holdings in Class B multiple voting shares of CGI for shares of BCE over a four-year period, an additional 30% in the fifth year, and the remainder during the sixth year. After the sixth anniversary, and for a period of two years after that, BCE has the option to cause the exchange ("call option") of all Class B multiple voting shares held by the majority shareholders into shares of BCE. On the sixth anniversary, the multiple voting shares will become single voting shares.

Shareholders will be asked to vote on resolutions primarily related to the share structure, and notably providing for redesignation of Class A subordinate voting shares as Common Shares six years hence when the Class B shares are to automatically convert into Class A shares on a one for one basis.

CGI is the largest Canadian-owned independent information technology consulting firm and the 6th largest in North America. With this transaction, CGI will have more than 7,500  professionals compared with 4,000 currently, and a revenue-run rate of approximately $1.1 billion. The company's backlog is worth $6 billion. CGI provides end-to-end IT services and business solutions to some 2,000  clients throughout North America and internationally. CGI's shares are listed on the Toronto and Montreal stock exchanges under the GIB.A symbol.

For more information:

Paule Doré
Executive Vice-President
Corporate Affairs
(514) 841-3200 

André Imbeau
Executive Vice-President and Chief Financial Officer
(514) 841-3200