Logica and CMG make marriage proposal

By Alun Williams

Posted on 5 Nov 2002 at 17:43

Logica to merge with Anglo-Dutch CMG to form Europe's second largest IT services company

Logica to is to merge with CMG to form Europe's second largest IT services company.

The boards of Logica and the Anglo-Dutch company CMG have announced plans to merge. The new company, LogicaCMG will be Europe's second largest IT services company (Cap Gemini takes that particular crown).

According to the official announcement, Logica and CMG believe they have 'complementary geographical coverage with a similar industry focus'. The goal is to specialise in wireless messaging and payments software.

The combined turnover of the two companies amounts to around the £2bn mark.

'Bringing Logica and CMG together will create a powerhouse in IT services and wireless telecoms,' believes the CEO of Logica, Dr Martin Read. 'The new company will combine Logica's leadership in project management and strategic focus on repeatable solutions with CMG's exceptional customer management skills. Together, they create a powerful platform for enhanced future growth.'

A Logica spokesperson confirmed that job losses were expected as a result of the merger.

They believed up to 6 per cent of the workforce could be lost. Given that the combined entity would consist of 200 offices in 34 countries employing some 24,000 people, this means 1,400 jobs could go.

Would these involve the UK? The spokesperson said that this depended on the exact progress of the merger - it had yet to be determined which industrial sectors, let alone which countries, would involve redundancies.

Shareholder approval and then EC approval is needed before the deal can be formalised. Logica, however, foresee no threat from the EC. It's 'a box to be ticked' we were told.

The headquarters of the joint entity will be in London.

The chief executive of CMG, Cor Stutterheim, is to become non-executive chairman of LogicaCMG. The CEO of Logica, Dr. Martin Read, will be chief executive.