Paris-based technology consulting firm Capgemini will acquireKanbay, the IT services concern focused on financial services, for$1.25 billion, the companies said.

Paul Hermelin, Capgemini chief executive officer, said purchaseof the Rosemont, Ill.,-based Kanbay supports company growthstrategy and significantly enhances its insurance practice, globalbanking and financial services (BFSI), particularly in NorthAmerica and India.

According to their announcement, under the definitive agreement,Capgemini will pay Kanbay $29 per share in cash, a premium of 15.9percent to Kanbay's closing share price on Wednesday, and 28.3percent to the average price during the month prior to theannouncement.

Mr. Hermelin called Kanbay a “world-class IT services provider”with more than 5,000 associates. The firms said they expect thecombined company to be “a global IT services powerhouse” withsignificantly expanded service offerings, and a leading financialservices and consumer goods franchise.

It is expected that the transaction will close by early 2007.Capgemini also has entered into share purchase agreements toacquire 14.9 percent of Kanbay's outstanding shares from certaincore shareholders.

Capgemini said the acquisition is in line with an expansionstrategy that significantly increases Capgemini's presence inIndia.

The combined company would have about 12,000 employees in Indiaby the end of 2006, which would therefore become Capgemini's secondlargest country, with 16 percent of the total headcount.

According to the companies, the deal positions Capgemini as aleader in the financial services sector, accounting for 22 percentof the global IT market, and also enhances its domainexpertise.

Raymond J. Spencer, chairman and chief executive officer ofKanbay, will join the top management of Capgemini.

The companies said they believe the merger is a “landmarktransaction” in the global IT services industry, which could“fundamentally transform the professional services industry byenabling efficient global services delivery via an integratedsingle point solution delivered in a seamless fashion, resulting ina lower total cost of ownership for the client.”

Capgemini employs approximately 65,000 people worldwide andreported 2005 global revenues of EUR7 billion ($8.8 billion).

Kanbay Inc. has approximately 6,900 associates worldwide withoffices in North America and India as well as London, Singapore,Hong Kong, Tokyo and Melbourne.