- Nexxlink acquires certain CGI assets generating annual revenues of
- Capital Investment by CGI in Nexxlink
- Nexxlink and CGI sign a long-term business alliance
MONTREAL, Oct. 21 /CNW Telbec/ - Nexxlink Technologies Inc. (TSX: NTI), a
leading Canadian provider of integrated information technology ("IT")
solutions, and CGI Group Inc. (TSX: GIB.A, NYSE: GIB), a world leader in IT
and business process services, announce the conclusion of an important three-tiered strategic alliance involving the acquisition by Nexxlink of certain CGI
assets, the securing of a major interest by CGI in Nexxlink's capital stock,
and a long-term business alliance between the two companies.
Acquisition of assets
Nexxlink is purchasing various CGI assets generating approximately $40
million in annual revenues. These assets, obtained by CGI as part of the
acquisition of Cognicase, consist mainly of integrated management system
software package suites (Enterprise Resource Planning or ERP) and related
services targeted to municipalities, healthcare bodies as well manufacturing
and distribution companies. These integrated solutions play a key role in the
management of many client organizations, including 70% of the municipalities
in Quebec, several hospital centres in the province, and numerous well-known
Canadian companies. Besides the intellectual property of an extensive
portfolio of specialized solutions, the acquisition includes a substantial
customer base and the transfer of some 375 employees.
"This acquisition enables us to expand our client base, strengthen our
range of services, and above all to become the leading Canadian provider of
integrated IT solutions in our market," said Karol Brassard, Nexxlink's
Executive Chairman of the Board.
Robert Courteau, President and Chief Executive Officer at Nexxlink,
added: "We are proud to welcome these business units' highly qualified
employees. Their expertise will contribute to Nexxlink's success for many
years to come."
The transaction amounts to $21 million, broken down as follows:
$10.5 million cash, including a $4.5 million balance of sale with CGI, and
$10.5 million by the issuance of a note convertible into 2.5 million shares at
a price of $4.20 per share. The note shall be automatically converted upon the
approval by Nexxlink's shareholders who will vote on the matter at the Annual
General and Special Meeting of Shareholders to be held on December 11, 2003.
This transaction will give CGI a 32% equity interest in Nexxlink's capital
"We are delighted to conclude this agreement with Nexxlink," confirmed
Serge Godin, CGI's Chairman and Chief Executive Officer. "Since the product
suite forming the subject of this transaction fits better with Nexxlink's
strategy than with CGI's, Nexxlink is thus well positioned to serve these
clients and take full advantage of these assets."
CGI to become Nexxlink's largest shareholder
Subsequent to this transaction, CGI will hold 2.5 million shares of
Nexxlink (in escrow for 24 months), representing 32% of the Company's capital
stock, which consists of 7.9 million issued and outstanding shares. CGI will
thereby become the Company's largest shareholder. "Our situation as a future
shareholder of Nexxlink leaves absolutely no doubt as to our confidence about
our partner's growth and profit potential," indicated Mr. Godin.
Karol Brassard added: "We are pleased to welcome Jean Brassard, CGI's
Vice-Chairman of the Board, and Jacques Roy, Senior Vice-President, Finance
and Treasury of CGI as directors. The Company and its shareholders will
greatly benefit from the expertise and wise counsel of these two highly
Long-term business alliance
Concurrently with this transaction, Nexxlink and CGI have signed a seven-year business alliance. Nexxlink and CGI will thus maintain privileged
business relations for the provision of their respective services and products
Mr. Courteau commented: "We are highly confident that this alliance will
enable us to accelerate our growth and better serve our respective clients, no
matter what their size."
The National Bank of Canada, in syndication with the Caisse Centrale
Desjardins, have concluded a bank financing arrangement of up to $15.0 million
with Nexxlink in order to enable the Company to close this transaction and
finance its operations. This financing, in the form of a revolving operating
credit, is for a two-year term and renewable. "This bank financing arrangement
minimizes the dilution of our shareholders' investment associated with this
transaction and will allow us to finance the Company's internal growth," added
New momentum for Nexxlink
This alliance represents a major shift in Nexxlink's development. Under
the terms of this transaction, the Company will generate annualized revenues
of approximately $100 million and have some 700 employees. "Considering the
profitability of the acquired assets and the expected cross-selling, we are
confident these new operations will raise our profitability per share in the
short term. The immediate expansion of our client base and our business
alliance with a North American IT leader will definitely give the Company new
momentum," concluded Karol Brassard.
Founded in 1976, CGI is the fourth largest independent information
technology services company in North America, based on its headcount. CGI and
its affiliated companies employ 20,000 professionals. CGI's annualized revenue
run-rate is CDN$2.9 billion (US$2.1 billion) and, at July 29, 2003, its order
backlog was CDN$12.5 billion (US$9.1 billion). CGI provides end-to-end IT and
process services to clients worldwide from offices in Canada, the United
States and Europe. CGI's shares are listed on the TXS (GIB.A) and the NYSE
(GIB) and are included in S&P/TSX Composite Index as well as the S&P/TSX
Capped Information Technology and MidCap Indices. Web Site: www.cgi.com.
Involved in the information technology (IT) industry since 1977, Nexxlink
Technologies Inc. is a leading Canadian provider of integrated IT solutions.
The simple and efficient solutions provided by the Company allow businesses to
focus on their core competencies. Nexxlink truly offers hassle-free computing
services. Nexxlink achieves approximately $100 million in annual sales and
employs some 700 people across the country. The Company's shares are listed on
the TSX under the ticker symbol NTI. Web Site: www.nexxlink.com.
NEXXLINK WILL HOLD A CONFERENCE CALL ON OCTOBER 21, 2003, AT 2:00 P.M.
TO PARTICIPATE, PLEASE DIAL 1 800 814-4862.
To listen to the recording until October 22, 2003, please dial:
1 877 289-8525 (code : 21023278(pound key).
The conference call will also be available on the net for 90 days at:
Forward-looking statements contained in this press release involve known
and unknown risks, uncertainties or other factors that may cause actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements.
/For further information: Karol Brassard, Executive Chairman of the
Board, Robert Courteau, President and Chief Executive Officer, 1 877 Nexxlink;
(514) 828-4428, Web Site: www.nexxlink.com; CGI Group Inc. (TSX: gib.a, NYSE:
gib), Julie Creed, Vice-President, Investor Relations, 1 (312) 201-4803;
Ronald White, Director, Investor and Media Relations, 1 (514) 841-3230; Eileen
Murphy, Director, Media Relations, 1 (514) 841-3430, Web Site: www.cgi.com;
Renmark Financial Communications Inc.: Barry Mire -
bmire(at)renmarkfinancial.com, Media Relations: Dominic Sicotte -
dsicotte(at)renmarkfinancial.com, (514) 939-3989, Web Site:
(GIB.A. GIB NTI.)
CO: CGI GROUP INC.; NEXXLINK TECHNOLOGIES INC.
IN: CPR MLM
SU: JVN JVN FNC
-0- Oct/21/2003 16:14 GMT
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