The CGI Group Inc. (GIB.A) today announced that it has signed a letter of intent to acquire the Insurance Systems group of Teleglobe Inc. effective September 30, 1997, subject to due diligence and usual regulatory approvals.
Teleglobe's Insurance Systems group is the third largest outsourced supplier of processing services to the property and casualty insurance industry in North America and the largest in Canada, with revenue for the last 12 months of $163.5 million and a current revenue run rate based on latest quarterly results of approximately $185 million. It generates about 56% of its revenues in the U.S., 38% in Canada, and 6% overseas.
"This acquisition is our largest to date and, if completed, will prove strategic for CGI," said Serge Godin, Chairman and CEO. "It broadens and strengthens CGI's position in the fast-growing financial services industry, adding leadership in the property and casualty insurance sector to our existing leadership in the banking and life insurance sectors. It provides a solid foundation for CGI to grow in the important U.S. market, with emphasis on outsourcing business, and significantly increases our revenue base. The operations being acquired are well managed, profitable and represent an excellent fit for CGI."
CGI is acquiring Teleglobe's Insurance Systems group for $20 million cash plus $120 million of first preferred shares, valued at $45.58 per share on a pre-split basis, carrying one vote per share and convertible one-for-one into Class A subordinate shares not earlier than six months after the closing date. (CGI's shares are being split 2-for-1 effective August 12, 1997.)
The U.S. operations of Teleglobe's Insurance Systems group provide the U.S. property and casualty insurance industry with specialized computer processing services and applications software, serving a customer base made up of over 120 companies, including 14 of the 25 largest insurers and over 100 agents and brokers.
The Canadian operations offer full service computer processing facilities, as well as software and information services, to over 70 property and casualty companies and approximately 1,200 insurance brokers. The group's overseas operations sell and support proprietary business solutions for personal insurance, mostly in Europe. The group is headquartered in Massachusetts and employs approximately 900 people, including 300 in Canada.
The acquisition would increase financial services as a percentage of CGI's overall revenues to approximately 58%, from 35% currently. CGI has been active as a supplier to the insurance industry, with its proprietary business solution for claims management.
CGI is the largest Canadian owned independent information technology consulting firm. Before taking into account the effect of the proposed acquisition, CGI has 2,900 professionals, a revenue run rate of $300 million, and an order backlog valued at over $1 billion. It provides end-to-end IT services and business solutions to more than 1,800 clients throughout Canada and elsewhere in the world.
For more information, contact:
André Imbeau, Executive Vice-President and CFO
Paule Doré, Executive Vice-President, Corporate Affairs
Telephone: (514) 841-3200
