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.

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