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.