RealTime IT News

Cap Gemini, Cisco Form Global Company

European IT services giant Cap Gemini and Internet technology leader Cisco Systems Inc. announced Wednesday a new global Internet consultancy backed with $164 million from Cisco and staffed by 4,600 people from Cap Gemini.

The new company will essentially be a Cap Gemini subsidiary, with the European company owning 95.1 percent and Cisco getting just a 4.9 percent stake. However, Cisco is putting a further $671 million into Cap Gemini itself in return for 2.6 million Cap Gemini shares.

Although it will have a global role, the new company will focus initially on Europe, providing consulting, services and technologies to companies participating in the Internet economy.

Headed by Alexandre Haeffner, the present chairman of Cap Gemini's Telecom & Media unit, the new company's board will be composed of five representatives from Cap Gemini and one from Cisco.

Don Listwin, executive vice president of Cisco Systems, said the announcement underscored the trend toward a new business model where Internet solutions are provided through what he called "an Internet ecosystem of partners."

"This ecosystem is based on open, standards-based technology and allows hundreds of companies to participate. Together, Cap Gemini and Cisco are expanding the ecosystem to deliver solutions that will help our service provider and enterprise customers compete and survive in the Internet Economy," said Listwin.

Paul Hermelin, a member of Cap Gemini's Executive Board, said that Cap Gemini wanted to help telecom operators and large enterprises move in full force to the networked economy.

The deal between the two companies contains built-in safeguards for Cisco in the event of a rival making a takeover bid for the Cap Gemini Group. If this should happen, Cisco has the option of purchasing 100 per cent of Cap Gemini's shares in the new company.

Markets reacted cautiously to the deal, Cap Gemini shares rising 4.7 per cent on early trading.