19th Sep 2005 06:00
Not for release, distribution or publication into or in the United States,Australia, Canada, Japan or the Republic of South Africa19 September 2005LogicaCMG plcProposed Acquisition of Unilog S.A., France's sixth largest IT servicesprovider, for a total consideration of ¢â€š¬930.3 million (‚£630.6 million),creating a top ten IT services provider in Europe1 for 2 Rights Issue of up to 375,495,147 Rights Issue Shares at 107 pence per Share to raise net proceeds of approximately ‚£389 million - LogicaCMG plc ("LogicaCMG") has conditionally agreed to acquireapproximately 32.3 per cent. of the issued share capital of Unilog S.A.("Unilog"), a leading French IT service provider, from certain members of themanagement of Unilog and others for a total of ¢â€š¬255.4 million in cash and theissue of 19,572,703 new Consideration Shares.- Subject to a number of conditions, it is proposed to acquire the remaining67.7 per cent. of the share capital of Unilog by way of a public tender offerto Unilog Shareholders.- Under the Tender Offer, LogicaCMG will pay ¢â€š¬73.0 in cash for each UnilogShare, representing a premium of approximately 11.5 per cent. over the onemonth average Unilog Share price of ¢â€š¬65.5 on 15 September 2005 andapproximately 32.8 per cent. over the one month average Unilog Share price of ¢â€š¬55.0 on 30 June 2005, the day prior to the emergence of bid rumours in respectof Unilog.- The combination of the two businesses will significantly strengthenLogicaCMG's position as a leading European force in IT services with over27,000 employees, combined pro forma revenues in 2004 of ‚£2.1 billion and aworldwide network of offices. The Directors believe that the combination of thetwo businesses will create:- A top ten IT services provider in Europe, well positioned to capitalise onimproving markets and changing customer demands- The number four player in the French market, complementing LogicaCMG'sexisting strong positions in the UK and the Netherlands- The opportunity to meet the need for outsourced and offshore services inFrance- A more effective platform for the combined group to develop its business inGermany- The ability to cross-sell LogicaCMG's capabilities to Unilog's Europeanblue-chip customers.- The Directors and the Proposed Directors believe that there is significantpotential to achieve operational synergies of approximately ‚£19 million in theyear ending 31 December 2007, up to half of which are expected to be achievedin the year ending 31 December 2006.- The Acquisition is expected to enhance LogicaCMG's earnings per share in thefirst full year, growing thereafter, and to cover LogicaCMG's cost of capitalin the second full year following completion.- The Acquisition will be part-funded by way of a fully underwritten 1 for 2Rights Issue of up to 375,495,147 Rights Issue Shares at a price of 107 penceper Share to raise approximately ‚£389 million, net of expenses. The Issue Pricerepresents a discount of approximately 36.3 per cent. to the closing price of168 pence per Share on 16 September 2005. The Rights Issue has been fullyunderwritten by Merrill Lynch International, Hoare Govett and BNP PARIBAS.- Under the terms of the Acquisition Gƒ©rard Philippot, currently ExecutivePresident of Unilog, will join the Board of LogicaCMG as a non-executivedirector. Didier Herrmann, currently Executive Vice President of Unilog, willalso join the LogicaCMG Board and, together with Aydin Azernour and PatrickGuimbal, will join LogicaCMG's Executive Committee. Didier Herrmann will beresponsible for LogicaCMG's business in France, Germany and Switzerland.- Completion of the Acquisition is subject to a number of conditions,including LogicaCMG shareholder approval which will be sought at anExtraordinary General Meeting to be held on 13 October 2005. The French tenderoffer is expected to open in early November and to close by the year end.Commenting on the proposed acquisition, Gƒ©rard Philippot, President of Unilog,said:"This move is transformational for our customers and staff and secures thesuccessful long-term future of Unilog in an increasingly global market place.By combining with a leading international IT services player such as LogicaCMG,we will have improved strength and scale to compete on major internationalcontracts and to support our prestigious clients globally. For our staff thistransaction provides the opportunity to extend their expertise as part of agrowing and dynamic enterprise with a strong international outlook."Martin Read, Chief Executive of LogicaCMG, said:"This transaction has a strong commercial, financial and strategic logic.Unilog is an excellent business with a track record of delivering a first classperformance. Its highly successful management team share our approach andvision for the enlarged business. The two businesses have complementary clientbases, geographical strengths and service offerings. There are excitingopportunities to cross-sell capabilities across the two businesses,particularly LogicaCMG's expertise in outsourcing and global delivery as demandfor these services increases.Through the merger of Logica plc and CMG plc in 2002 we created a strong playerin the European IT services market, particularly in the UK and the Netherlands.With the acquisition of Unilog, we strengthen this position further, bybecoming a major player in France, Europe's third largest IT services market.This is an exciting development for both businesses. The Enlarged Group will bewell placed to seize opportunities in a fast moving and increasingly global ITservices market."For further information please contact:LogicaCMGLogicaCMG media relations - Carolyn Esser 020 7446 1786 (mobile: 07841602391)LogicaCMG investor relations - Tony Richards/Frances Gibbons 020 7446 4341(mobile: 07733 260393)Citigate Dewe Rogerson - Toby Mountford/Seb Hoyle 020 7638 9571Merrill Lynch - Bob Wigley/Michael Findlay 020 7628 1000BNP Paribas Paris - Daniel Weisslinger +33 1 43 16 94 82BNP Paribas London - Oliver Ellingham, Nicholas Groen 020 7595 2000Hoare Govett - Bob Pringle/Hugo Fisher 020 7678 8000UnilogUnilog analyst/investor relations - Christian Vigui„“ +33 1 58 22 40 21Unilog press relations - Christine Dollfus +33 1 58 22 46 91Photographs of Martin Read, CEO of LogicaCMG, and Gƒ©rard Philippot, Presidentof Unilog, are available at www.vismedia.co.uk.Analyst presentationAnalysts are invited to a presentation at Merrill Lynch International MainAuditorium, 2 King Edward Street, London EC1. Those attending should arrive at9.00 a.m. for a 9.30 a.m. start. For those who are unable to attend in person,the presentation can be viewed live and subsequently by archive via webcast at:http://www.logicacmg.com/investors/index.asp. Analysts unable to attend willbe able to place questions into the meeting by using the associated dial-innumber: +44 20 8996 3940 Pass code: C 076980.About LogicaCMGLogicaCMG is a major international force in IT services and wireless telecoms.It provides management and IT consultancy, systems integration and outsourcingservices to clients across diverse markets including telecoms, financialservices, energy and utilities, industry, distribution and transport and thepublic sector. The company employs around 21,000 staff in offices across 35countries and has more than 40 years of experience in IT services.Headquartered in Europe, LogicaCMG is listed on both the London and Amsterdamstock exchanges (LSE: LOG; Euronext: LOG). More information is available fromwww.logicacmg.com.About UnilogUnilog is one of the most important French IT services companies, widelyrenowned for its performance. Its expertise ranges from management consultingto outsourcing to systems integration and training, and it is at the service ofmajor companies in sectors such as industry, financial services, services, andgovernment. Unilog has approximately 7,400 employees and its 2004 turnover was657 million Euros. Its staff is mainly located in France, but Unilog also has astaff of approximately 1,100 (including full-time contractors) in Germany, aswell as being present in the United Kingdom, Switzerland, and Austria. Unilogis listed on the Paris stock exchange where it has its registered office. Moreinformation is available from www.unilog.fr.Expected timetable of eventsDespatch of the Prospectus 19 September 2005 Record Date for entitlement under the Rights Issue for Qualifying close ofShareholders (other than Qualifying Euroclear Shareholders) business on 10 October Extraordinary General Meeting 9.30 a.m. on 13 October Record Date for entitlement under the Rights Issue for Qualifying close ofEuroclear Shareholders business in Amsterdam on 13 October Despatch of Provisional Allotment Letters 14 October Dealings in Rights Issue Shares, nil paid, commence on the London 8.00 a.m.Stock Exchange and dealings in Euroclear Subscription Rights oncommence on Euronext Amsterdam 14 October Existing Shares marked "ex" by the London Stock Exchange and 8.00 a.m.Euronext Amsterdam on 14 October Nil Paid Rights and Fully Paid Rights enabled in CREST and byEuroclear Subscription Rights enabled in Euroclear Nederland 8.00 a.m. on 14 October Completion of the Block Trade 25 October Latest time and date for delivery of Euroclear Subscription Rights 10.00 p.m.,and payment in full by holders of Euroclear Subscription Rights Amsterdam time, on 4 November Latest time and date for acceptance, delivery of Nil Paid Rights 11.00 a.m.payment in full for rights taken up in CREST and registration of onrenunciation of Provisional Allotment Letters 4 November Dealings in Rights Issue Shares, fully paid, commence on the London byStock Exchange and Euronext Amsterdam 8.00 a.m. on 7 November Rights Issue Shares credited to CREST stock accounts and to the 7 NovemberEuroclear Nederland accounts of the relevant Admitted Institutions Despatch of definitive share certificates for the Rights Issue by no laterShares in certificated form than 15 November BNP PARIBAS, which is regulated in the United Kingdom by the Financial ServicesAuthority, is acting as joint financial adviser and underwriter to LogicaCMGand is acting for no-one else in connection with the Acquisition or the RightsIssue and will not be responsible to anyone other than LogicaCMG for providingthe protections afforded to customers of BNP PARIBAS nor for providing advicein connection with the Acquisition or the Rights Issue or the contents of thisannouncement or any other matter referred to therein.Merrill Lynch International, which is regulated in the United Kingdom by theFinancial Services Authority, is acting as joint financial adviser, jointsponsor, joint corporate broker and underwriter to LogicaCMG and is acting forno-one else in connection with the Acquisition or the Rights Issue and will notbe responsible to anyone other than LogicaCMG for providing the protectionsafforded to customers of Merrill Lynch International nor for providing advicein connection with the Acquisition or the Rights Issue or the contents of thisannouncement or any other matter referred to herein.Hoare Govett, which is regulated in the United Kingdom by the FinancialServices Authority, is acting as joint sponsor, joint corporate broker andunderwriter to LogicaCMG and is acting for no-one else in connection with theAcquisition or the Rights Issue and will not be responsible to anyone otherthan LogicaCMG for providing the protections afforded to customers of HoareGovett nor for providing advice in connection with the Acquisition or theRights Issue or the contents of this announcement or any other matter referredto herein.The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law and therefore persons in suchjurisdictions into which this announcement is released, published ordistributed should inform themselves about and observe such restrictions.No offer, invitation or inducement to acquire shares or other securities inLogicaCMG is being made by or in connection with this announcement. Any offer,invitation or inducement to acquire shares in LogicaCMG will be made solely bymeans of the prospectus, published on 19 September 2005, as updated by anysupplementary prospectus, and any decision to keep, buy or sell shares inLogicaCMG should be made solely on the basis of the information contained insuch document(s).This announcement is not for distribution or transmission, directly orindirectly, in or into the United States, Canada, Australia, Japan or theRepublic of South Africa and does not constitute, or form part of, an offer tosell or the solicitation of an offer to subscribe for or buy and any securities("Securities"), nor the solicitation of any vote or approval in anyjurisdiction, nor shall there be any sale, issue or transfer of the Securitiesreferred to in this announcement in any jurisdiction in contravention ofapplicable law.The Securities have not been and will not be registered under the US SecuritiesAct of 1933, as amended (the "Securities Act") and may not be offered or soldin the United States unless registered under the Securities Act or an exemptionfrom such registration is available. No public offering of Securities of theCompany is being made in the United States.LogicaCMG plcProposed Acquisition of Unilog S.A., France's sixth largest IT Servicesprovider, for a total consideration of ¢â€š¬930.3 million (‚£630.6 million),creating a top ten IT Services provider in Europe1 for 2 Rights Issue of up to 375,495,147 Rights Issue Shares at107pence per Share to raise net proceeds of ‚£389 million IntroductionThe Board of LogicaCMG plc ("LogicaCMG") announces that LogicaCMG hasconditionally agreed to acquire approximately 32.3 per cent. of the issuedshare capital of Unilog S.A. ("Unilog"), a French IT service provider listed onEuronext Paris, from certain members of the management of Unilog and others(the "Block Trade"). Subject to completion of the Block Trade, LogicaCMGintends to acquire the remaining 67.7per cent. of the share capital of Unilogby way of a public tender offer to Unilog Shareholders. The considerationpayable for the Block Trade will comprise the payment to the vendors of a totalof ¢â€š¬255.4 million in cash and the issue to the vendors in total of 19,572,703Consideration Shares, which will be the subject of lock-up agreements. Theprice per Unilog Share payable under the Tender Offer will be ¢â€š¬73 and theAcquisition values the entire issued share capital of Unilog at ¢â€š¬930.3 million.It is not anticipated that the Tender Offer price will be increased, but anyincrease would be subject to prior approval of Shareholders in general meeting.LogicaCMG proposes to fund the Acquisition through the Term Loan Facility for ¢â€š¬348 million and by way of a Rights Issue to raise approximately ‚£389 million,net of expenses. The Rights Issue has been fully underwritten by Merrill LynchInternational, Hoare Govett and BNP PARIBAS. Qualifying Shareholders will beoffered Rights Issue Shares under the Rights Issue at a price of 107 pence eachon the basis of 1 Rights Issue Share for every 2 Existing Shares held at theRecord Date. The Issue Price represents a discount of approximately 36.3 percent. to the closing Share price of 168 pence on 16 September 2005 (being thelatest business day prior to the announcement of the Rights Issue).Following completion of the Block Trade, Gƒ©rard Philippot, currently ExecutivePresident of Unilog, will join the Board as a non¢â‚¬â€œexecutive director. Followingcompletion of the Acquisition, Didier Herrmann, currently Executive VicePresident of Unilog, will join the Board and, together with Aydin Azernour andPatrick Guimbal, will join the Executive Committee. In addition, it is proposedthat certain new management incentivisation arrangements will be put in placefor members of the Unilog management team.Completion of the Acquisition is subject to the satisfaction of a number ofconditions including the receipt of merger clearance from the relevantcompetition authorities in France and Germany and the approval of LogicaCMGShareholders. As at 31 December 2004, the Unilog Group's gross assets were ¢â€š¬525million and in the year ended 31 December 2004, the Unilog Group's profitbefore tax of ¢â€š¬55 million. Completion of the Rights Issue is conditional uponShareholder approval to increase LogicaCMG's authorised share capital, to issueand allot the Rights Issue Shares and to disapply Shareholders' statutorypre-emption rights. Shareholders will also be asked to approve the ManagementIncentivisation Arrangements. Shareholder approval will be sought at anExtraordinary General Meeting to be held on 13 October 2005.Background to and reasons for the AcquisitionLogicaCMG is an international provider of management and IT consultancy,systems integration and outsourcing services to clients across five keysectors: telecoms, financial services, energy and utilities, distribution andtransport and the public sector. As at 30 June 2005, the Group employed around21,000 staff in offices across 35 countries.Unilog, listed on Euronext Paris, is a mid-cap IT services provider thatspecialises in the provision of IT services including consultancy, systemsintegration, outsourcing and training to clients across markets includingindustry, banking and insurance and the services sector. Unilog has over 7,400staff and operations in France, Germany, Switzerland, the United Kingdom,Austria and Luxembourg.LogicaCMG's long¢â‚¬â€œterm strategic aim is to become a worldwide top ten ITservices provider, with a balanced portfolio of service offerings (consulting,systems integration and outsourcing) and the development of additional,significant profit generating centres in Europe in order to provide the scale,balance and customer mix that will enable growth in its global presence. A keypart of this is for LogicaCMG to complement its existing strong presence in theUK and the Netherlands.The Directors believe that the combination of Unilog and LogicaCMG wouldrepresent a significant step in achieving LogicaCMG's strategic objectives byadding a third major revenue and profit generator. Directors and the ProposedDirectors expect the Enlarged Group to have approximately 7,600 staff inFrance, to represent approximately 22.3 per cent. of the Enlarged Group's totalrevenue and to be the fourth largest IT services provider in France. Directorsand the Proposed Directors expect Enlarged Group to comprise over 2,200 staffin Germany to provide a credible platform for growth in those markets. The Directors and the Proposed Directors believe that the Enlarged Group willbenefit from:- Enhanced market position and platform for growth in Europe- The Acquisition combines complementary geographical and operational strengthsand customer relations which will provide the Enlarged Group with cross sellingopportunities for products on a European-wide basis. Whilst LogicaCMG wouldhave the benefit of a strong French distribution channel through which tomarket and sell its products and services, Unilog would benefit fromLogicaCMG's ability to provide a full service range to Unilog's clients'international operations, as well as from LogicaCMG's advanced outsourcing andoffshore capabilities.- In the year ended 31 December 2004, LogicaCMG France's total revenue was ¢â€š¬167 million compared with Unilog France's total revenue of ¢â€š¬529 million.- The Directors and the Proposed Directors believe that the Enlarged Groupwould become the fourth largest provider by revenue of IT consulting andsystems integration services by revenue in France.- Strengthened sales synergies and complementary client relationship- Unilog focuses on developing its business through building longstandingrelationships with major organisations, for example, AXA, BNP PARIBAS, EDF,France Tƒ©lƒ©com, Total and Vivendi. Many of these longstanding clients havebeen clients of Unilog for between 20 and 30 years. Unilog manages its top 20client accounts through a system of dedicated key account managers. Ten keyclient accounts represented approximately 30 per cent. of the Unilog Group'stotal revenue in France in the year ended 31 December 2004 and five key clientaccounts represented approximately 20 per cent. of the Unilog Group's totalrevenue in Germany in the same period.A significant number of Unilog's top 20 clients are also clients of LogicaCMG,providing an enhanced opportunity for the Enlarged Group to cross¢â‚¬â€œsellLogicaCMG's outsourcing capabilities and offshore services. The broaderinternational presence of the Enlarged Group is also expected to enhance theopportunity to provide a greater range of services to clients in a wider rangeof territories.- Strengthened, complementary distribution and delivery capabilities- Recent market trends have highlighted a move towards more complex and largercontracts being awarded to a smaller number of larger suppliers, particularlythose offering a wider product portfolio and geographical base. The Directorsand the Proposed Directors believe that the Enlarged Group would be in a betterposition to respond to such market trends. - LogicaCMG's outsourcing and global services capabilities, including datacentres and low cost nearshore and offshore delivery centres provide a keyopportunity to meet the increasing desire by customers for outsourced andoffshore services.- Track record of profitability and achieving operational synergies- The Directors and the Proposed Directors believe that Unilog is one of themost profitable French IT service providers. Unilog has consistentlymaintained high levels of profitability with average operating margin in Franceover the past three financial years exceeding 10 per cent. Unilog has recordedgrowth ahead of the market in France every year since 1996. Similarly, theDirectors and the Proposed Directors believe that LogicaCMG has a position asone of the top margin performers amongst its peers. The focus on deliveringprofitability and rigorous cost management are key similarities in the seniormanagement teams and business cultures of Unilog and LogicaCMG.- The Directors and the Proposed Directors have identified a number of areaswhere they believe that operational synergies can be achieved. The Directorsand the Proposed Directors believe that there is significant potential toachieve operational synergies of approximately ‚£19 million in the year ending31 December 2007, up to half of which are expected to be achieved in the yearending 31 December 2006. The total costs of achieving these operationalsynergies, which are expected to be reported as exceptional items by theEnlarged Group, are expected to be approximately ‚£28 million and will beincurred in 2006 and 2007.The Directors and the Proposed Directors believe that these operationalsynergies will be achieved over the two year period from:- optimisation of use of premises;- integration of staff and an increase in staff utilisation;- introduction of common systems and processes; and- reduction of duplicated corporate overheads.In addition, the Directors and the Proposed Directors believe that the EnlargedGroup will facilitate revenue synergies through complementary clientrelationships, cross¢â‚¬â€œselling to Unilog's clients, an improved position forwinning large international outsourcing contracts with blue chip clients andthe opportunity to win a higher share of revenue from large clients through theimproved service offering and capability of the Enlarged Group.Terms of the AcquisitionBlock TradeOn 19 September 2005, LogicaCMG entered into a conditional agreement topurchase a total of 3,974,725 Unilog Shares from Gƒ©rard Philippot, DidierHerrmann and certain other shareholders in Unilog (the "Principal Block TradeAgreement"). LogicaCMG has agreed to purchase 3,362,522 Unilog Shares for ¢â€š¬245.5 million in cash (‚£166.4 million, based on an exchange rate of ¢â€š¬1.4754 to‚£1 as at 16 September 2005, the latest business day prior to the publication ofthis announcement) and 612,203 Unilog Shares in consideration for the issue of19,572,703 Consideration Shares. In addition, LogicaCMG has agreed to pay anamount of additional consideration in the event that it either files anincrease to the Tender Offer or in circumstances where a higher rival offer ismade.Pursuant to a separate agreement dated 19 September 2005 (the "Brulant BlockTrade Agreement"), LogicaCMG has conditionally agreed to acquire, on the dateof completion of the Block Trade, an additional 135,695 additional UnilogShares held by Christian Brulant, at a price amounting in aggregate to ¢â€š¬9.9million payable wholly in cash, equal to the price per Unilog Share under thePrincipal Block Trade Agreement (and subject to the same terms and conditionsas regards additional compensation). The Principal Block Trade Agreement andBrulant Block Trade Agreement together constitute the Block Trade.The Block Trade is conditional, amongst other things, upon the passing of theResolutions 1, 2 and 4 to be proposed at the Extraordinary General Meeting andthe receipt of merger clearance from the relevant competition authorities inFrance and Germany. Subject to satisfaction of the conditions by no later than24 October 2005, LogicaCMG expects completion of the Block Trade to occur on oraround 25 October 2005.On completion of the Block Trade, the Unilog Selling Shareholders will enterinto a lock-up agreement pursuant to the terms of which they will agree not todispose of any of the Shares to be issued to them by LogicaCMG in connectionwith the Acquisition until the end of specified periods ranging from 12 monthsto two years from the date of completion of the Tender Offer.Tender OfferSubject to completion of the Block Trade in accordance with its terms,LogicaCMG intends to acquire the remaining 67.7 per cent. of Unilog Shares byway of a public tender offer to Unilog Shareholders. The Tender Offer will notbe extended to Unilog Shareholders who are resident in the United States andwill not be made through the use of US jurisdictional means. The Tender Offerwill be carried out in accordance with the General Regulations issued andenforced by the AMF and will be a 100 per cent cash offer at a price of ¢â€š¬73 perUnilog Share. There will be no conditions attaching to the Tender Offer.Mr Serge Dubrana (owner of 75,843 Unilog Shares) has indicated his willingnessto tender all of his shares to the Tender Offer, to use 32.9 per cent. of thecash consideration from the sale of his Unilog Shares to acquire LogicaCMGShares and ensure that these Shares will be subject to the Lock-up Agreement.There is no acceptance condition to the Tender Offer and therefore in the eventthat overall, and taken together with the Block Trade Shares which representapproximately 32.3 per cent. of Unilog's issued share capital, LogicaCMGacquires less than 50 per cent. of Unilog's issued share capital, LogicaCMG mayend up holding a minority shareholding in Unilog.Upon completion of the Tender Offer LogicaCMG may choose, in accordance withand to the extent permitted by French law, to take the customary steps toacquire any remaining Unilog Shares from outstanding minority Shareholders.Unilog Share Options and WarrantsSome employees and directors of Unilog currently hold options and warrants tosubscribe for Unilog Shares under one or more of the Unilog Share OptionSchemes.Following completion of the Acquisition, these options and warrants willcontinue to vest and become exercisable in accordance with their terms, andemployees and directors of Unilog will continue to be able to acquire UnilogShares. In order that any Unilog Shares issued to employees and directors ofUnilog on exercise of options or warrants may be acquired by LogicaCMG, and inorder that employees and directors of Unilog who exercise their options andwarrants are able to realise value, LogicaCMG proposes to enter into sharetransfer agreements with the holders of such options and warrants pursuant towhich, following exercise, any Unilog Shares issued to them will be transferredto LogicaCMG either for Rights Issue Shares (on the same basis as for theShares issued under the Block Trade) or for a cash equivalent amount.Management Incentivisation ArrangementsIt is proposed that, following completion of the Acquisition, one-offincentivisation arrangements will be entered into between Unilog (as part ofthe Enlarged Group) LogicaCMG and certain key directors and employees ofUnilog. In summary, directors and employees who participate in sucharrangements will receive awards over Shares which will vest subject to theachievement of performance targets over one or two financial years. Awards willlapse should the award-holder resign or be dismissed for cause prior to thedate on which the award vests.Financial effects of the Acquisition on LogicaCMGThe Directors and the Proposed Directors believe that the Acquisition willenhance LogicaCMG's earnings per share in the first full year of tradingfollowing completion of the Acquisition, growing thereafter. This statementshould not be interpreted to mean that the future earnings per share ofLogicaCMG will necessarily match or exceed its historical published earningsper share.In addition, the Directors and Proposed Directors expect the Acquisition tocover the cost of capital in the second full year of trading followingcompletion.As at 30 June 2005, the Group has net assets of ‚£391.7 million and net debt of‚£303.0 million. On the basis of the assumptions in the unaudited Pro FormaStatement of Net Assets prepared to illustrate the effect of the Rights Issueand the Acquisition on the Group's net assets, as set out in the prospectusbeing sent to Shareholders, following receipt of the net proceeds of the RightsIssue of approximately ‚£389 million, net of expenses, execution of the NewFacilities and drawdown under the Term Loan Facility and completion of theAcquisition, the pro forma net assets of the Enlarged Group as at 30 June 2005would be ‚£877 million and pro forma net debt would be ‚£460 million.Financing the AcquisitionIt is estimated that the purchase of the Block Trade Shares and full acceptanceof the Tender Offer would require the payment by LogicaCMG of a maximum of ‚£602.1 million in cash (excluding costs associated with the Rights Issue andassuming full exercise of those options and warrants that are currentlyexercisable under the Unilog Share Option Schemes and acceptance of theresulting shares to be issued under the Tender Offer). In addition, a further ‚£45.6 million in cash would be required to be paid by LogicaCMG to acquire allfurther Unilog Shares (which are issued on the exercise of outstanding optionsand warrants) under the terms of the transfer arrangements described above(assuming an offer price of ¢â€š¬73per Unilog Share).The cash consideration payable by LogicaCMG under the Block Trade, beingapproximately ¢â€š¬255.4 million, will be financed from an initial drawing madeunder the Term Loan Facility, entered into by certain members of the Groupexpressly for the purpose of providing funds to discharge cash considerationpayable by LogicaCMG, to refinance LogicaCMG's Existing Facilities and toprovide working capital facilities for the Enlarged Group. The Term LoanFacility has been arranged by ABN AMRO, BNP PARIBAS, ING Bank and BarclaysBank.LogicaCMG will use the net funds raised by the Rights Issue, expected to beapproximately ‚£389 million, to repay the initial drawing under the Term LoanFacility. The consideration payable under the terms of the subsequent TenderOffer will be financed using the remaining proceeds from the Rights Issue andfurther drawing under the Term Loan Facility. LogicaCMG has arranged for theRights Issue to be underwritten in full by Merrill Lynch International, HoareGovett and BNP PARIBAS in order to provide certainty as to the amount ofcapital to be raised.The Rights Issue is not conditional upon completion of the Block Trade orcompletion of the Tender Offer. In the unlikely event that the Acquisition doesnot complete, the Board's current intention is that the proceeds of the RightsIssue will be invested on a short term basis while the Directors consider howbest to return surplus capital to Shareholders.Terms of the Rights IssueSubject to the satisfaction of the conditions referred to below, the Boardproposes to raise approximately ‚£389 million, net of expenses, by offering375,495,147 Rights Issue Shares by way of rights to Qualifying Shareholders at107 pence per Share, payable in full on acceptance.The Issue Price of 107 pence per Share represents a 36.3 per cent. discount tothe closing middle market price quotation of a Share as derived from the LondonStock Exchange's Daily Official List of 168 pence per share on 16 September2005, the last business day before the announcement of the Rights Issue. TheDirectors consider the level of discount to be appropriate having regard to thepotential dilution of Shareholders as a result of the size of the issue. Notwithstanding this level of discount, LogicaCMG has arranged for the RightsIssue to be fully underwritten in order to provide certainty of funding for theAcquisition.The Nil Paid Rights (also described as Rights Issue Shares, nil paid) areentitlements to subscribe for the Rights Issue Shares. Euroclear SubscriptionRights are transferable and tradable rights, created in Euroclear Nederland,each reflecting 0.5 Nil Paid Rights and exercisable in accordance with theSecurities Giro Act. The Fully Paid Rights are entitlements to receive theRights Issue Shares, for which a subscription and payment has already beenmade. The Rights Issue Shares are being offered by way of rights to QualifyingShareholders on the following basis:1 Rights Issue Share at 107 pence per share for every 2 Existing Shares held and registered in their name at the Record Date. Entitlements to fractionsof Rights Issue Shares will not be allotted to Qualifying Shareholders, butwill be aggregated and sold in the market for the benefit of LogicaCMG.Accordingly, Shareholders with fewer than 2 Existing Shares will not beentitled to subscribe for any Rights Issue Shares.The Rights Issue will result in the issue of 375,495,147 Rights Issue Shares(representing approximately 33.3 per cent. of the issued share capital ofLogicaCMG, as enlarged by the Rights Issue, but excluding the ConsiderationShares).The latest time and date for acceptance and payment in full under the RightsIssue for holders of Nil Paid Rights is 11.00 a.m. on 4 November 2005. Thelatest time and date for subscription for holders of Euroclear SubscriptionRights is 3.00 p.m, Amsterdam time on 1 November 2005. The latest time and datefor delivery of Euroclear Subscription Rights and payment in full for theRights Issue Shares for holders of Euroclear Subscription Rights is 10.00 a.m,Amsterdam time on 4 November 2005. Euroclear Subscription Rights are expectedto trade on Euronext Amsterdam until 1.00 p.m, Amsterdam time on 1 November2005.The Rights Issue is conditional upon:(i) Resolutions 1, 2 and 4 being passed at the Extraordinary General Meeting;(ii) the Underwriting Agreement having become unconditional in all respectsand not having been terminated in accordance with its terms; and(iii) Admission of the Rights Issue Shares, nil paid, to the Official Listbecoming effective by not later than 8.00 a.m. on 14 October 2005 or such latertime and/or date as the Underwriters may agree.The Rights Issue Shares will, when issued and fully paid, rank pari passu inall respects with the Existing Shares, including the right to receive alldividends and other distributions made, paid or declared after the date ofissue of the Rights Issue Shares, except that they will not carry the right toreceive the interim dividend for the year 2005 of 2.4 pence per share due to bepaid on 21 October 2005 to those Shareholders who were on the register ofmembers of LogicaCMG on 23 September 2005.The Existing Shares are currently traded on the London Stock Exchange andEuronext Amsterdam. Applications have been made to the UK Listing Authority andto the London Stock Exchange for the New Shares to be admitted to the OfficialList and to trading on the London Stock Exchange's main market for listedsecurities. Application has also been made for the New Shares to be listed onEuronext Amsterdam. It is expected that admission on the London Stock Exchangewill become effective and that dealings will commence, in the Rights IssueShares, nil paid, by 8.00 a.m. on 14 October 2005. It is expected that dealingsin the Euroclear Subscription Rights on Euronext Amsterdam will commence at9.00 a.m. Amsterdam time on 14 October 2005 and that admission of the RightsIssue Shares, fully paid, to listing on Euronext Amsterdam will becomeeffective and dealings will commence at on 4 November 2005. The EuroclearSubscription Rights are expected to trade on Euronext Amsterdam until 1.00p.m., Amsterdam time, on 1 November 2005.The date of admission of the Consideration Shares to the Official List, totrading on the London Stock Exchange's main market for listed securities and tolisting on Euronext Amsterdam is expected to be on or about 25 October 2005,but will depend on the date of completion of the Block Trade.Definitive share certificates for the Rights Issue Shares to be held incertificated form are expected to be despatched by post by no later than 15November 2005 to persons entitled at their registered address (unless lodgingagent details are supplied). Rights Issue Shares will be issued inuncertificated form to those persons registered as holding Fully Paid Rights inCREST as at the close of business on 4 November 2005 and will be credited tothe appropriate stock accounts of those persons at 8.00 a.m. on 7 November2005. Euroclear Nederland will credit the accounts of its Admitted Institutionswith the relevant number of Rights Issue Shares at 9.00 a.m., Amsterdam time on7 November 2005.Current trading, trends and prospectsLogicaCMGOn 31 August 2005, LogicaCMG released its interim result which contained thefollowing outlook statement:"Markets for IT services continued to improve gradually in the first half of2005 and although macroeconomic indicators in Europe remain mixed, many of ourcustomers are planning to spend more on external IT services this year.Order intake was very strong in the first half of 2005, up 50 per cent. overlast year as the Group further leveraged its scale and value-basedpropositions. This growth was driven primarily by outsourcing, includingcontracts with the UK Ministry of Defence, Energias de Portugal, Transport forLondon, the Metropolitan Police, Thames Water, ING and Delta Lloyd.Group revenues grew by 11 per cent. compared to the same period last year (8per cent. excluding Edinfor which joined the Group on 20 April). Outsourcing asa percentage of Group revenues grew to 24 per cent. in the first half of 2005.Growth accelerated through the second quarter of 2005 during the start-up phaseof several outsourcing contracts that included significant materials andcontractor revenues. The Wireless networks business returned to revenue growthand had another profitable half. Overall, operating profit was in line withexpectations and 23 per cent. ahead of last year, driving like-for-likeadjusted earnings per share growth of 33 per cent. in the first half.The strong order bookings produced an overall book to bill ratio of 1.59:1.With most markets still slowly improving, we continue to expect organic revenuegrowth of around 5 per cent. for the year as a whole. In addition, there willbe the benefit of a full six months' trading from Edinfor in the second half.The second half is seasonally stronger in both the IT services and wirelessnetworks businesses, particularly from an operating margin perspective. This isreinforced by the introduction of International Financial Reporting Standardswhereby provisions for holiday entitlement in the first half largely reversethrough the remainder of the year. The second half margin should also benefitfrom further progress in France and Germany, and a lower proportion ofmaterials revenues. Higher second half revenues in wireless networks will drivefurther margin improvement in that business. In line with our expectations, weare confident of significant progress for the remainder of the year.LogicaCMG has been positioned strongly to take advantage of the changesimpacting both its customers' and its own businesses. With the longer-termbenefits of the merger increasingly reflected in the Group's performance, weare focusing on growth and the future development of the Group, whilemaintaining the drive to improve profitability."Since the date of the interim results, current trading has continued in linewith our expectations and the trends noted in the outlook statement at thattime have continued. The Directors view the prospects for the Enlarged Groupwith confidence and believe that it will be well positioned for continuinggrowth in the current financial year and beyond.UnilogUnaudited consolidated revenue in the first half of 2005 was up 20.1 per cent.compared with the first half of 2004 and organic growth was 13.4 per cent.Unilog will benefit in 2005 from a full year's contribution to Avinci. InFrance, the acceleration in growth in the first half of 2005 encompassed allactivities, particularly consulting. Furthermore, Unilog's European subsidiarycompanies have seen a return to organic growth. In view of the Unilog Group'ssatisfactory first half performance, improved book and solid tradingperformance since 30 June 2005, the Unilog Board are positive as to theprospects and outlook for the current financial year.Extraordinary General MeetingIn view of its size, the Acquisition is conditional upon, amongst other things,the approval of Shareholders in general meeting. A prospectus containing anotice of the Extraordinary General Meeting and further information on theRights Issue and the Acquisition is expected to be posted to Shareholderstoday. The EGM is expected to be held on 13 October 2005 at Level One, ExchangeHouse, Primrose Street, London EC2A 2HS and the French tender offer is expectedto open in early November and to close by the year end.Overseas ShareholdersRights Issue Shares will be provisionally allotted to all QualifyingShareholders, including Overseas Shareholders. However, subject to certainexceptions, Provisional Allotment Letters will not be sent to QualifyingNon-CREST Shareholders with registered addresses in the United States or theExcluded Territories nor will the CREST stock account of Qualifying CRESTShareholders with registered addresses in the United States or the ExcludedTerritories be credited. If any person in the United States or an ExcludedTerritory receives a Provisional Allotment Letter, such person should not seekand will not be able to take up his rights thereunder.EmployeesLogicaCMG and Unilog both acknowledge the importance of keeping their employeesinformed about the Acquisition. In accordance with its obligations, Unilog hasalready provided information to and consulted with its employee representativebody about the Block Trade in accordance with its obligations and will providefurther information and carry out additional consultation in relation to theTender Offer where this is considered necessary or considered appropriate.The prospectus will be available on www.LogicaCMG.com as soon as practicableafter this announcement.Copies of the prospectus will be available for inspection during normalbusiness hours on Monday to Friday each week (public holidays excepted) fromtoday until the Rights Issue Shares are issued at the registered office ofLogicaCMG, Stephenson House, 75 Hampstead Road, London NW1 2PL and at theoffices of Herbert Smith LLP, Exchange House, Primrose Street, LondonEC2A 2HS. Copies of the prospectus will be made available free of charge uponrequest.In addition, the prospectus is available for inspection at the Document ViewingFacility at the Financial Service Authority, 25 The North Colonnade, LondonE14 5HS.BNP PARIBAS, which is regulated in the United Kingdom by the Financial ServicesAuthority, is acting as joint financial adviser and underwriter to LogicaCMGand is acting for no-one else in connection with the Acquisition or the RightsIssue and will not be responsible to anyone other than LogicaCMG for providingthe protections afforded to customers of BNP Paribas nor for providing advicein connection with the Acquisition or the Rights Issue or the contents of thisannouncement or any other matter referred to therein.Merrill Lynch International, which is regulated in the United Kingdom by theFinancial Services Authority, is acting as joint financial adviser, jointsponsor, joint corporate broker and underwriter to LogicaCMG and is acting forno-one else in connection with the Acquisition or the Rights Issue and will notbe responsible to anyone other than LogicaCMG for providing the protectionsafforded to customers of Merrill Lynch International nor for providing advicein connection with the Acquisition or the Rights Issue or the contents of thisannouncement or any other matter referred to herein.Hoare Govett, which is regulated in the United Kingdom by the FinancialServices Authority, is acting as joint sponsor, joint corporate broker andunderwriter to LogicaCMG and is acting for no-one else in connection with theAcquisition or the Rights Issue and will not be responsible to anyone otherthan LogicaCMG for providing the protections afforded to customers of HoareGovett nor for providing advice in connection with the Acquisition or theRights Issue or the contents of this announcement or any other matter referredto herein.The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law and therefore persons in suchjurisdictions into which this announcement is released, published ordistributed should inform themselves about and observe such restrictions.No offer, invitation or inducement to acquire shares or other securities inLogicaCMG is being made by or in connection with this announcement. Any offer,invitation or inducement to acquire shares in LogicaCMG will be made solely bymeans of the prospectus, published on 19 September 2005, as updated by anysupplementary prospectus, and any decision to keep, buy or sell shares inLogicaCMG should be made solely on the basis of the information contained insuch document(s).This announcement is not for distribution or transmission, directly orindirectly, in or into the United States, Canada, Australia, Japan or theRepublic of South Africa and does not constitute, or form part of, an offer tosell or the solicitation of an offer to subscribe for or buy and any securities("Securities"), nor the solicitation of any vote or approval in anyjurisdiction, nor shall there be any sale, issue or transfer of the Securitiesreferred to in this announcement in any jurisdiction in contravention ofapplicable law.The Securities have not been and will not be registered under the US SecuritiesAct of 1933, as amended (the "Securities Act") and may not be offered or soldin the United States unless registered under the Securities Act or an exemptionfrom such registration is available. No public offering of Securities of theCompany is being made in the United States.AppendixDefinitionsThe following principal definitions apply throughout this document unless thecontext requires otherwise: ABN AMRO ABN AMRO Bank NV Acquisition the proposed acquisition of Unilog Shares pursuant to the Block Trade and the Tender Offer Admission the admission of the Rights Issue Shares, nil paid, to the Official List becoming effective in accordance with the Listing Rules and admission of the Rights Issue Shares, nil paid, to trading having been granted by the London Stock Exchange Admitted the institutions which hold Shares on behalf of their clients Institutions through Euroclear Nederland as an admitted institution of Euroclear Nederland or, as the context so permits, which hold Shares on behalf of their clients through an institution which is an admitted institution of Euroclear Nederland AMF Autoritƒ© des Marchƒ©s Financiers, the French listing authority Block Trade the acquisition by LogicaCMG of the Block Trade Shares from the Principal Unilog Selling Shareholders pursuant to the Principal Block Trade Agreement and from Christian Brulant pursuant to the Brulant Block Trade Agreement Block Trade the Unilog Sold Shares and Unilog Contributed Shares, being in Shares aggregate 4,110,420 Unilog Shares, conditionally agreed to be acquired by LogicaCMG pursuant to the Principal Block Trade Agreement and the Brulant Block Trade Agreement Brulant Block the agreement between LogicaCMG and Christian Brulant pursuant Trade Agreement to which LogicaCMG agreed to acquire 135,695 Unilog Shares owned by Christian Brulant Consideration the shares to be issued to certain of the Unilog Selling Shares Shareholders and including, where relevant, any Additional Consideration Shares issued in accordance with the terms of the Block Trade CREST the relevant system (as defined in the CREST Regulations) in respect of which CRESTCo. Limited is the Operator (as defined in the CREST Regulations) CRESTCo CRESTCo Limited, the operator of CREST CREST the Uncertificated Securities Regulations 2001 (SI 2001 No. Regulations 3755) (as amended) Daily Official List the Daily Official List of the London Stock Exchange Directors or Board the Directors of LogicaCMG EGM or the extraordinary general meeting of LogicaCMG to take place on Extraordinary 13 October 2005 for the purpose of considering, and if thought General Meeting fit, approving the Resolutions Enlarged Group the Group as enlarged by the Acquisition Euroclear the Dutch depositary and settlement institute (Nederlands Nederland Centraal Instituut voor Giraal Effectenverkeer B.V.) defined as the central institute (centraal instituut) under the provisions of the Securities Giro Act Euroclear transferable and tradable rights, created in Euroclear Subscription Nederland, reflecting the Nil Paid Rights and exercisable in Rights accordance with the Securities Giro Act Euronext as the context requires, Euronext Amsterdam N.V., or Eurolist byAmsterdam Euronext Euronext Paris Euronext Paris S.A. Euronext Share interests in and corresponding to the Shares which at the Record Date are registered in the name of Euroclear Nederland and which are traded on Euronext Amsterdam Executive the Executive Committee of LogicaCMG, comprising the Executive Committee Directors and senior managers Existing Shares the ordinary shares of 10 pence each in the capital of LogicaCMG in existence at the date of this announcement Fully Paid Rights rights to acquire the Rights Issue Shares, fully paid General Regulations the General Regulations issued by the AMF Group LogicaCMG and its subsidiary undertakings (but excluding, for the avoidance of doubt, the Unilog Group) Hoare Govett Hoare Govett Limited IFRS International Financial Reporting Standards Issue Price 107 pence per Rights Issue Share Listing Rules the listing rules made pursuant to Part VI of the Financial Services and Markets Act 2000 LogicaCMG France LogicaCMG SAS LogicaCMG or the Company LogicaCMG plc London Stock Exchange London Stock Exchange plc Management the new management incentivisation arrangements to be put in Incentivisation place for Didier Herrmann and certain other key employees of Arrangements Unilog on completion of the Acquisition Merrill Lynch International Merrill Lynch International Limited New Facilities The committed debt facilities, comprising the Term Loan Facility and a revolving credit facility, being made available to LogicaCMG by the Syndicate New Shares the Consideration Shares and the Rights Issues Shares Nil Paid Rights Rights Issue Shares in nil paid form provisionally allotted to Qualifying Shareholders pursuant to the Rights Issue Official List the official list of the UK Listing Authority Overseas Qualifying Shareholders who are resident in, or citizens of, Shareholders countries other than the United Kingdom, France, Germany the Republic of Ireland or the Netherlands Principal Block the agreement dated 19 September 2005 between LogicaCMG and the Trade Agreement Unilog Selling Shareholders other than Christian Brulant pursuant to which LogicaCMG conditionally agreed to acquire 31.2 per cent. of the issued share capital of Unilog Proposed Directors Mr Gƒ©rard Philippot and Mr Didier Herrmann Provisional the renounceable provisional allotment letters relating to the Allotment Rights Issue, expected to be dispatched on 14 October 2005 to Letter(s) Qualifying Non-CREST Shareholders other than certain Overseas Shareholders Qualifying Euroclear persons holding Euronext Shares at the Record Date Shareholders Qualifying Non-CREST Qualifying Shareholders whose Existing Shares on the register ofShareholders members of LogicaCMG at the Record Date are in certificated form Qualifying Shareholders on the register of members of LogicaCMG at the Shareholders Record Date Record Date for Qualifying Shareholders (other than Qualifying Euroclear Shareholders) close of business on the London Stock Exchange on 10 October 2005, and, for Qualifying Euroclear Shareholders, close of business on Euronext Amsterdam on 13 October 2005 Resolutions the resolutions set out in the notice of Extraordinary General Meeting to be sent to Shareholders Rights Issue the proposed issue 1 for 2 of the Rights Issue Shares to Qualifying Shareholders by way of rights on the terms and subject to the conditions set out in the prospectus to be sent to Shareholders and the Provisional Allotment Letters Rights Issue up to 375,495,147 new ordinary shares of 10 pence in the capitalShares of LogicaCMG to be issued by LogicaCMG pursuant to the Rights Issue Securities Giro Act the Dutch Securities Giro Act (Wet giraal effectenverkeer) Shareholder any holder of Shares Shares ordinary shares of 10 pence each in the capital of LogicaCMG (including Existing Shares, Rights Issue Shares and Consideration Shares) including where relevant shares held by Euroclear Nederland in it capacity as central institute under the Securities Giro Act and the context so permits, interest in such shares by other persons in accordance with the Securities Giro Act Syndicate ABN AMRO, BNP Paribas, Barclays Bank and ING Bank Tender Offer the proposed offer to acquire all of the issued or to be issued Unilog Shares other than the Block Trade Shares Term Loan the new term loan facility entered into on 19 September 2005 as Facility part of the New Facilities UK Listing Authority or Financial Services Authority in its capacity as competent UKLA authority under the Financial Services and Markets Act 2000 Underwriters Merrill Lynch International, Hoare Govett and BNP Paribas Underwriting the agreement dated 19 September 2005 between Merrill Lynch Agreement International, Hoare Govett, BNP PARIBAS and LogicaCMG relating to the underwriting of the Rights Issue Unilog Unilog S.A. Unilog the 612,203 Unilog Shares to be acquired by LogicaCMG for the Contributed issue of 19,572,703 Consideration Shares pursuant to the Shares Principal Block Trade Agreement Unilog Group Unilog and its subsidiary undertakings Unilog Selling Gerard Phillipot, Didier Herrmann, Pierre Deschamps, Adin Shareholders Azernour, Patrice Dabilly, Patrick Guimbal and Christian Brulant, being certain shareholders selling Block Trade Shares pursuant to the Principal Block Trade Agreement and the Brulant Block Trade Agreement Unilog Shareholders holders of Unilog Shares Unilog Shares ordinary shares of ¢â€š¬1 each in the capital of Unilog Unilog Share Option Schemes the stock option plans and BSARs operated by Unilog Unilog Sold the 3,362,522 Unilog Shares to be acquired by LogicaCMG for cashShares pursuant to the Principal Block Trade Agreement together with the 135,695 Unilog Shares to be acquired by LogicaCMG for cash pursuant to the Brulant Block Trade Agreement United Kingdom or UK the United Kingdom of Great Britain and Northern Ireland ENDLOGICACMG PLCRelated Shares:
LOG.L