Date: Friday 01 Jun 2012
Merchant Securities has assessed the possibility of a counter-bid for business and technology service company Logica, one day after Canadian group CGI offered to buy the firm for 1.7bn pounds.
The agreed cash bid by CGI was for 105p per Logica share; on Thursday the stock settled at 110.9p "indicating the market sees some opportunity for a counter-bid," said Merchant analyst Roger Phillips.
"The rationale for this is presumably Schroder / Artemis support being conditional on a competing offer above 115.5p not coming in, and the 105p price being only slightly above levels hit in March," he said.
While not completely impossible, the broker thinks that a counter-bid looks fairly unlikely: "Logica is too big to swallow for Indian players, niche deals in the hundreds of millions range being more preferable and having less strategic risk. This is the first transatlantic IT services purchase of large cap European IT services in over fifteen years, illustrating the rarity of this type of approach."
Possible bidders include Japanese group NTT and private equity firm Permira, but the broker sees "few players as willing to believe in their abilities to improve Logica margins as CGI".
After rocketing by nearly 70% the day before, the shares pulled back on Friday morning, trading down 2.25% at 108.4p by 10:40.
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