Date: Thursday 31 May 2012
Peel Hunt has downgraded its rating for technology services group Logica from buy to hold and raised its target price from 95p to 105p following Thursday's bid from CGI.
Logica has agreed to a 105p-a-share cash bid from Canadian technology group CGI, which "comes as a surprise to us as we had felt the risks associated with the acquisition of large services businesses would preclude a bid," said Peel Hunt analyst Peter Morland.
"However, Logica was unloved by the UK investment community and this bid crystallises what we believe to be the company’s true worth."
The broker thinks that the offer is unlikely to be countered as most of the large players in the industry seem inappropriate candidates: "The US players already have strength in European services and Indian pure plays are probably too conservative to take on anything as large as Logica."
Nevertheless, Morland says that the bid "does seem somewhat opportunistic" seeing as though Logica was trading over 100p as recently as March.
Shares rocketed in morning trade, up 64.38% at 108p by 11:00.
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