Logica and CMG in merger talks

Logica and CMG in merger talks

Logica and CMG have confirmed that they are holding talks aimed at creating Europe's third largest computer services firm.

The all-share merger would give Logica a 60% holding in the combined group. It is envisaged that Cor Stutterheim (executive chairman, CMG) would be the non-executive chairman and Martin Read (managing director & chief executive, Logica) would be the chief executive officer of the combined entity.

In addition to offering scope for significant operating cost savings across the combined businesses, a merger would create one of Europe’s largest quoted IT services businesses and a leading company in mobile messaging software. The merger would put Logica/CMG behind Cap Gemini Ernst & Young and Atos origin in the European IT services league.

The merger is subject to due diligence says Logica. No further announcement is expected for several weeks.

CMG's London-listed shares rose 38.8% to 55.5 pence on the news, while Logica added two percent to 127.5 pence, with anlysts viewing the deal as a shotgun marriage for Logica. Both firms have suffered a declining share price on the dot com crash and turmoil in the telecomms market.

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