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

Paul Hermelin, Capgemini chief executive officer, said purchase of the Rosemont, Ill.,-based Kanbay supports company growth strategy and significantly enhances its insurance practice, global banking and financial services (BFSI), particularly in North America and India.

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

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

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

Capgemini said the acquisition is in line with an expansion strategy that significantly increases Capgemini's presence in India.

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

According to the companies, the deal positions Capgemini as a leader in the financial services sector, accounting for 22 percent of the global IT market, and also enhances its domain expertise.

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

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

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

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

Special Reports /

Capgemini Buying Kanbay

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