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RealTime IT News

Cap Gemini to Buy Ernst & Young Consulting

Cap Gemini Tuesday outlined terms for the acquisition of nearly all of Ernst & Young Consulting, with a price tag estimated 11.5 billion euros ($11.1 billion).

The initial agreement covers Ernst & Young Consulting businesses in the United States, Canada, United Kingdom, Germany, France, Spain and Italy.

It is expected that the Ernst & Young Consulting businesses in many other countries will join in the next few weeks, including those in Sweden, Norway, Finland, Denmark, the Netherlands, Belgium, Australia and New Zealand.

Around 18,000 people work for Ernst & Young, which had a turnover of 3.5 billion euros ($3.2 billion) in 1999.

Cap Gemini said the transaction would enable the combined group become a major player in the U.S., strengthen its position in Germany, and greatly expand its consultancy services.

To pay for the acquisition, Cap Gemini will issue a maximum of 43.5 million new shares and pay 375 million euros ($360 million).

Cap Gemini's clients include Tesco, ICI, Corus, and Philips. Ernst & Young brings such heavyweights as Boeing, Coca Cola, Infoseek.com, GlaxoWellcome and the Ford Motor Company.

Cap Gemini's shares rose by 14 percent in Paris when the news became known early Tuesday morning.