Cap Gemini restructures on Ernst & Young purchase

IT services firm Cap Gemini SA will this weekend reveal a new global brand for businesses recently acquired from Ernst & Young LLP.

Cap Gemini shareholders on Tuesday approved the issue of new share capital to complete the acquisition of Ernst & Young Consulting, begun in February.

The shareholders meeting also agreed to a change to the company's corporate governance structure, re-introducing an 11-member board of directors and an executive committee.

The company's new corporate identity will be revealed this weekend at a meeting for senior managers in Berlin, said Cap Gemini spokeswoman Florence Mairal. She refused to give details of the new name, but said there would be no surprises. "The group has every reason to capitalise on the names of the two companies," she said.

The new name will be a transitional measure, Mairal said, because under the terms of the acquisition the company only has rights to use the Ernst & Young name for four years.

Cap Gemini shareholders approved the terms of the acquisition and the issue of 42.7 million new shares to Ernst & Young in compensation for the contributed businesses, together with 375 million euros ($US340 million) cash, the company said in a statement yesterday. The terms of the agreement were announced in February.

The shareholders' meeting also approved the creation of an 11-member board of directors. For the last four years, Cap Gemini has operated under a four-man directorate and a supervisory committee, Mairal said. "It was a German system," introduced at the insistence of German investors Daimler Benz, she said.

The reintroduction of the board of directors marks a return to a more characteristically French system of governance, she said.

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