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May 31, 2012 01:34 pm GMT

IT Services Consolidation: CGI To Buy Logica For $2.6B (And Crashes Logicas Site In Process)

logica logoSome enterprise IT consolidation afoot, and a sign of the business crunch that the enterprise market has witnessed in the last year.CGI Corporation, an IT services firm based in Canada, has made an all-cashoffer of $2.6 billion (1.7 billion) to buy UK rival Logica, a deal that would create one more IT services powerhouse to rival the likes of IBM, Accenture and KPMG.The offer represents a premium of 60 percenton Logica's closing share price yesterday. Logica, one of Europe's biggest IT services firms, has hit the rocks in the last year, with profit shrinking to 32.7 million ($50.6m) from 192.9 million ($299m) the year before on the back of IT cuts in the public sector, a key vertical for the company. It also laid off some 1,300 people in 2011. And margins for IT services -- a challenge for all IT services companies -- shrank to 2.2 percent from over eight percent in Logica's main UK business.

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