CGI has fought
speculation that BCE may divest itself of its ownership stake. BCE publicly announced that it may dispose of its control block in CGI, but later said in December 2002 that this “”is no longer BCE’s preferred course of action.””
A CGI statement in April said that the two companies were still in talks and that a final decision would be made before Aug. 1. That led to further speculation that CGI was considering another acquisition target, possibly Xwave Solutions Inc. Godin squashed that, saying, “”It was just speculation and rumours, it has never been the case.””
BCE will keep 29.9 per cent of CGI’s equity, albeit with some changes. BCE will convert its seven million Class B multiple shares into Class A single voting shares.
“”It allows BCE to go and sell it on the open market at virtually any time it wants,”” said Troy Crandall, a financial analyst with MacDougall, MacDougall & MacTier, based in Montreal. “”Really, in this agreement . . . there’s really no restriction on BCE of any future sale of its shares.
“”Essentially CGI has had that overhang on its shares, and this really doesn’t answer anything. It just basically makes it easier for BCE to dump the shares if they wanted to.””
“”We’re happy right now to remain at the stake that we have. Our current intention is to hold onto the stake,”” BCE spokesman Nick Kaminaris said.
“”BCE and CGI succeeded in developing a plan which met our two original intentions,”” said CGI CEO Godin. “”A plan that would ensure the continuity of CGI’s management and . . . a plan that would allow BCE to realize the maximum value of its investment in CGI.””
BCE’s voting stake in CGI is now 17.5 per cent. It has given up 4 per cent, which increases the voting rights of CGI management to 48 per cent, up from 44.
BCE has also extended its outsourcing relationship with CGI. Two 10-year contracts with Bell Canada dated May 1998 and June 2001 and a 10-year agreement with Bell Mobility dated May 1999 have all been extended to June 30, 2012.
“”On the one hand, we agreed the IS/IT contract by a matter of three years, on the other hand, CGI agreed to give us substantial savings on our IS/IT contract needs,”” said Kaminaris.
The companies have also renewed their commercial alliance agreement to the same date. “”We will be developing a more proactive go to market strategy to jointly address large enterprise clients and government markets,”” said Godin. He added CGI’s relationship with BCE accounts for approximately 17 per cent of its revenue.