French management consultant and IT services provider Cap Gemini SA and networking giant Cisco Systems Inc. today said they will form a joint venture designed to help telecommunications carriers, service providers and cable companies put corporate networks in place.
As part of the deal, Cisco will invest US$835 million in the Cap Gemini Group, with $164 million of that going towards the new joint company, and the rest directly into Cap Gemini SA, according to a joint statement.
When the deal closes, Cisco will own 2.6 million shares of Cap Gemini and a 4.9 percent share in the new, yet-to-be-named joint company. Cap Gemini, meanwhile, will hold 95.1 percent of the joint venture, which will become a subsidiary of the French company.
The new venture will offer networking products from Cisco bundled with Cap Gemini's services, said Florence Mairal, a spokeswoman for Cap Gemini. The French company already advises customers on installing and implementing traditional telecommunications networks, and the deal will bring Cap Gemini both products and expertise in the area of IP (Internet protocol)-based networks, she said.
Cap Gemini will contribute most of the employees to the new company, in the form of some 4,600 staff mostly from its Telecom & Media group, as well as data and networking design experts and management consultants. Cisco will also make network specialists available to the new company, according to the joint statement.
Heading the venture will be Alexandre Haeffner, who currently runs Cap Gemini's Telecom & Media group. Five executives from Cap Gemini and one from Cisco will sit on the company's board of directors, the companies said.
The new company will focus mainly on Europe, the companies said, but will also extend to the U.S. and Asia. The deal also gives Cisco the right to purchase the new company if Cap Gemini is taken over by another company, the statement said.
The news comes on the heels of another large deal for Cap Gemini. Late last month, it agreed to purchase Ernst & Young's consulting business for around $11 billion.