Capgemini to Acquire Kanbay International
October 26 2006 - 12:30AM
Business Wire
Capgemini, one of the world�s foremost providers of Consulting,
Technology and Outsourcing services, and Kanbay International,
(NASDAQ: KBAY), a global IT services firm focused on the financial
services industry, announced today that they have entered into a
definitive merger agreement. Under the terms of the merger
agreement, Capgemini will acquire all of the outstanding common
shares of Kanbay for $29 per share in cash. This represents a
premium of 15.9% to Kanbay�s closing share price on Wednesday
October 25 and 28.3% to the average price during the month prior to
announcement. The transaction values Kanbay�s share capital
including vested stock options, warrants and restricted shares at
$1.25 billion. The Boards of Directors of Capgemini and Kanbay have
approved the transaction. The transaction is subject to customary
closing conditions, including Kanbay�s shareholders approval and
anti-trust clearance. It is expected that the transaction will
close by early 2007. In addition, Capgemini has entered into share
purchase agreements to acquire 14.9% of Kanbay�s outstanding shares
from certain core shareholders. This acquisition is fully in line
with Capgemini�s expansion strategy: it significantly increases
Capgemini�s presence in India (+89% based on Q3 figures). The
combined company would have headcount reaching 12,000 employees by
the end of 2006 in India which would therefore become the second
largest country (with 16% of total headcount); it strengthens
Capgemini�s presence in North America and confirms the Group�s
ambition in this market; it positions Capgemini as a leader in the
Financial Services sector - which accounts for 22% of the global IT
market - and enhances its domain expertise. This transaction is
expected to have a positive impact on Capgemini�s earnings per
share. The anticipated EPS accretion is in excess of 5% in 2007 and
10% in 2008. Capgemini is in a position to fully finance this
transaction with its significant end of year net cash position. It
doesn�t exclude to raise up to 500 million euros in equity to
rebuild room for maneuver and participate to a possible further
movement of consolidation. Both decision and timing will be subject
to the then prevailing market conditions. Raymond J. Spencer,
Chairman and Chief Executive Officer of Kanbay, will join the top
management of Capgemini. Mr. Spencer stated: �The combination of
Kanbay with Capgemini is very exciting news for our shareholders,
customers and employees. While this transaction creates excellent
value for shareholders, Capgemini also shares our existing vision
and stated strategy. Thus, this deal represents a continuation of
our existing approach. In addition, the two organizations will
benefit from complementary business philosophies and cultures.�
Capgemini Chief Executive Officer, Paul Hermelin noted: �The
acquisition of Kanbay, a world-class IT services provider, supports
our growth strategy and significantly enhances our global Banking,
Financial Services and Insurance (BFSI) practice, particularly in
North America and India, where Kanbay has over 5,000 associates.
The acquisition also gives us valuable capabilities in Consumer and
Industrial Products, Telecommunications, Media, Life Sciences and
the Travel & Leisure verticals.� �The acquisition of Kanbay is
excellent news for our shareholders, our clients and our people. It
fits in perfectly with the Group�s expansion program called I3
which focuses on three levers: industrialization, intimacy with our
clients and innovation� underlines Mr. Hermelin. �This acquisition
occurs in a context of strong momentum for Capgemini: after
releasing good H1 results, the Group posts a 13.5% revenue growth
at constant rates and perimeter in the 2006 third quarter.� The
combination of Kanbay and Capgemini creates a top-tier global IT
services firm with unparalleled domain knowledge in the financial
services vertical, seamless consulting and technology expertise,
and market leading offshore resources. Paul Hermelin and Raymond
Spencer concluded: �We believe this is a landmark transaction in
the global IT services industry. This event can 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.� Lazard Freres and Morgan Stanley acted
as financial advisors to Capgemini in connection with the
transaction. Skadden, Arps, Slate, Meagher & Flom LLP, and
Latham & Watkins (as special anti-trust counsel) acted as legal
advisers to Capgemini in connection with the transaction. UBS
Securities LLC acted as financial adviser to Kanbay and provided a
fairness opinion in connection with the transaction. Winston &
Strawn LLP acted as legal adviser to Kanbay in connection with the
transaction. About CAPGEMINI Capgemini, one of the world's foremost
providers of Consulting, Technology and Outsourcing services, has a
unique way of working with its clients, which it calls the
Collaborative Business Experience. Through commitment to mutual
success and the achievement of tangible value, Capgemini helps
businesses implement growth strategies, leverage technology, and
thrive through the power of collaboration. Capgemini employs
approximately 65,000 people worldwide and reported 2005 global
revenues of euros 6,954 million. More information is available at
www.Capgemini.com About KANBAY Founded in 1989, Kanbay, Inc.
(NASDAQ: KBAY) is a global IT services firm with approximately
6,900 associates worldwide. Kanbay provides a highly integrated
suite of management consulting, technology integration and
development, and outsourcing solutions through a proven global
delivery platform to clients focused on Financial Services and
Consumer & Industrial Products, as well as an emerging presence
in the Communications & Media and Life Sciences industries.
Kanbay is a CMM Level 5 assessed company headquartered in greater
Chicago with offices in North America and India as well as London,
Singapore, Hong Kong, Tokyo and Melbourne. More information is
available at http://www.Kanbay.com. This announcement is not an
offering of securities in the United States of America or
elsewhere. Securities may not be offered or sold in the USA absent
registration or an applicable exemption from registration
requirements. Forward-Looking Statements This release contains
forward-looking statements within the meaning of federal securities
laws. Forward-looking statements with respect to the completion of
the transaction and the financial condition, results of operations
and business of the companies are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those set forth in such statements. We can give no assurance
that any projections or future results discussed in these
statements will be achieved. Readers are cautioned not to place
undue reliance on these forward looking statements and any such
forward-looking statements are qualified in their entirety to the
cautionary statements contained in this press release. Neither
CAPGEMINI nor KANBAY updates forward-looking statements and
expressly disclaims any obligation to do so. Additional Information
about the Transaction and Where to Find It In connection with the
proposed transaction, KANBAY intends to file relevant materials
with the Securities and Exchange Commission, including a proxy
statement on Schedule 14A. INVESTORS AND SECURITY HOLDERS OF KANBAY
ARE URGED TO READ THESE MATERIALS WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT KANBAY,
CAPGEMINI AND THE TRANSACTION. The proxy statement and other
relevant materials (when they become available) and any other
documents filed by KANBAY with the SEC may be obtained free of
charge at the SEC�s website at www.sec.gov. In addition, investors
and security holders may obtain free copies of the documents filed
with the SEC by Kanbay by accessing [the �Investor Relations�
section of KANBAY�s website at www.Kanbay.com. Investors and
security holders are urged to read the proxy statement and the
other relevant materials when they become available before making
any voting or investment decision with respect to the proposed
transaction. Capgemini and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from
the shareholders of Kanbay in connection with the transaction
described herein. Information regarding the special interests of
these directors and executive officers will be included in the
Proxy Statement/Prospectus to be circulated in connection with the
transaction. Additional information regarding these directors and
executive officers is also included in Capgemini's information
statements and publicly available reports. These documents are
available from Capgemini at www.capgemini.com, by mail at 11, rue
de Tilsitt, Paris 75017, France or by phone at 33-1-47-54-5000.
Capgemini, one of the world's foremost providers of Consulting,
Technology and Outsourcing services, and Kanbay International,
(NASDAQ: KBAY), a global IT services firm focused on the financial
services industry, announced today that they have entered into a
definitive merger agreement. Under the terms of the merger
agreement, Capgemini will acquire all of the outstanding common
shares of Kanbay for $29 per share in cash. This represents a
premium of 15.9% to Kanbay's closing share price on Wednesday
October 25 and 28.3% to the average price during the month prior to
announcement. The transaction values Kanbay's share capital
including vested stock options, warrants and restricted shares at
$1.25 billion. The Boards of Directors of Capgemini and Kanbay have
approved the transaction. The transaction is subject to customary
closing conditions, including Kanbay's shareholders approval and
anti-trust clearance. It is expected that the transaction will
close by early 2007. In addition, Capgemini has entered into share
purchase agreements to acquire 14.9% of Kanbay's outstanding shares
from certain core shareholders. This acquisition is fully in line
with Capgemini's expansion strategy: -- it significantly increases
Capgemini's presence in India (+89% based on Q3 figures). The
combined company would have headcount reaching 12,000 employees by
the end of 2006 in India which would therefore become the second
largest country (with 16% of total headcount); -- it strengthens
Capgemini's presence in North America and confirms the Group's
ambition in this market; -- it positions Capgemini as a leader in
the Financial Services sector - which accounts for 22% of the
global IT market - and enhances its domain expertise. This
transaction is expected to have a positive impact on Capgemini's
earnings per share. The anticipated EPS accretion is in excess of
5% in 2007 and 10% in 2008. Capgemini is in a position to fully
finance this transaction with its significant end of year net cash
position. It doesn't exclude to raise up to 500 million euros in
equity to rebuild room for maneuver and participate to a possible
further movement of consolidation. Both decision and timing will be
subject to the then prevailing market conditions. Raymond J.
Spencer, Chairman and Chief Executive Officer of Kanbay, will join
the top management of Capgemini. Mr. Spencer stated: "The
combination of Kanbay with Capgemini is very exciting news for our
shareholders, customers and employees. While this transaction
creates excellent value for shareholders, Capgemini also shares our
existing vision and stated strategy. Thus, this deal represents a
continuation of our existing approach. In addition, the two
organizations will benefit from complementary business philosophies
and cultures." Capgemini Chief Executive Officer, Paul Hermelin
noted: "The acquisition of Kanbay, a world-class IT services
provider, supports our growth strategy and significantly enhances
our global Banking, Financial Services and Insurance (BFSI)
practice, particularly in North America and India, where Kanbay has
over 5,000 associates. The acquisition also gives us valuable
capabilities in Consumer and Industrial Products,
Telecommunications, Media, Life Sciences and the Travel &
Leisure verticals." "The acquisition of Kanbay is excellent news
for our shareholders, our clients and our people. It fits in
perfectly with the Group's expansion program called I cubed which
focuses on three levers: industrialization, intimacy with our
clients and innovation" underlines Mr. Hermelin. "This acquisition
occurs in a context of strong momentum for Capgemini: after
releasing good H1 results, the Group posts a 13.5% revenue growth
at constant rates and perimeter in the 2006 third quarter." The
combination of Kanbay and Capgemini creates a top-tier global IT
services firm with unparalleled domain knowledge in the financial
services vertical, seamless consulting and technology expertise,
and market leading offshore resources. Paul Hermelin and Raymond
Spencer concluded: "We believe this is a landmark transaction in
the global IT services industry. This event can 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." Lazard Freres and Morgan Stanley acted
as financial advisors to Capgemini in connection with the
transaction. Skadden, Arps, Slate, Meagher & Flom LLP, and
Latham & Watkins (as special anti-trust counsel) acted as legal
advisers to Capgemini in connection with the transaction. UBS
Securities LLC acted as financial adviser to Kanbay and provided a
fairness opinion in connection with the transaction. Winston &
Strawn LLP acted as legal adviser to Kanbay in connection with the
transaction. About CAPGEMINI Capgemini, one of the world's foremost
providers of Consulting, Technology and Outsourcing services, has a
unique way of working with its clients, which it calls the
Collaborative Business Experience. Through commitment to mutual
success and the achievement of tangible value, Capgemini helps
businesses implement growth strategies, leverage technology, and
thrive through the power of collaboration. Capgemini employs
approximately 65,000 people worldwide and reported 2005 global
revenues of euros 6,954 million. More information is available at
www.Capgemini.com About KANBAY Founded in 1989, Kanbay, Inc.
(NASDAQ: KBAY) is a global IT services firm with approximately
6,900 associates worldwide. Kanbay provides a highly integrated
suite of management consulting, technology integration and
development, and outsourcing solutions through a proven global
delivery platform to clients focused on Financial Services and
Consumer & Industrial Products, as well as an emerging presence
in the Communications & Media and Life Sciences industries.
Kanbay is a CMM Level 5 assessed company headquartered in greater
Chicago with offices in North America and India as well as London,
Singapore, Hong Kong, Tokyo and Melbourne. More information is
available at http://www.Kanbay.com. This announcement is not an
offering of securities in the United States of America or
elsewhere. Securities may not be offered or sold in the USA absent
registration or an applicable exemption from registration
requirements. Forward-Looking Statements This release contains
forward-looking statements within the meaning of federal securities
laws. Forward-looking statements with respect to the completion of
the transaction and the financial condition, results of operations
and business of the companies are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those set forth in such statements. We can give no assurance
that any projections or future results discussed in these
statements will be achieved. Readers are cautioned not to place
undue reliance on these forward looking statements and any such
forward-looking statements are qualified in their entirety to the
cautionary statements contained in this press release. Neither
CAPGEMINI nor KANBAY updates forward-looking statements and
expressly disclaims any obligation to do so. Additional Information
about the Transaction and Where to Find It In connection with the
proposed transaction, KANBAY intends to file relevant materials
with the Securities and Exchange Commission, including a proxy
statement on Schedule 14A. INVESTORS AND SECURITY HOLDERS OF KANBAY
ARE URGED TO READ THESE MATERIALS WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT KANBAY,
CAPGEMINI AND THE TRANSACTION. The proxy statement and other
relevant materials (when they become available) and any other
documents filed by KANBAY with the SEC may be obtained free of
charge at the SEC's website at www.sec.gov. In addition, investors
and security holders may obtain free copies of the documents filed
with the SEC by Kanbay by accessing (the "Investor Relations"
section of KANBAY's website at www.Kanbay.com. Investors and
security holders are urged to read the proxy statement and the
other relevant materials when they become available before making
any voting or investment decision with respect to the proposed
transaction. Capgemini and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from
the shareholders of Kanbay in connection with the transaction
described herein. Information regarding the special interests of
these directors and executive officers will be included in the
Proxy Statement/Prospectus to be circulated in connection with the
transaction. Additional information regarding these directors and
executive officers is also included in Capgemini's information
statements and publicly available reports. These documents are
available from Capgemini at www.capgemini.com, by mail at 11, rue
de Tilsitt, Paris 75017, France or by phone at 33-1-47-54-5000.
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