The Successful Investor Hotline – Friday, June 1, 2012

Article Excerpt

CGI GROUP INC., $23.37, Toronto symbol GIB.A, jumped 13% this week after it agreed to buy Logica plc, a U.K.-based firm that provides computer outsourcing services in 36 countries. Logica gets 60% of its sales from the U.K. government. CGI will pay roughly $2.8 billion for Logica. That’s equal to 52% of CGI’s $5.4-billion market cap, so it’s a major acquisition for the company. But Logica is a good fit with CGI, which is Canada’s largest provider of computer outsourcing services. Both companies’ services automate certain routine functions, like accounting and buying supplies. That makes their clients more efficient and lets them focus on their main businesses. To help pay for this purchase, the company will raise $1.0 billion by selling 46.7 million class A subordinate voting shares at $21.41 each to the Caisse de dépôt et placement du Québec. That will increase the total number of class A shares outstanding by 21%. CGI will borrow the remaining $1.8 billion. That will raise…