The Canadian IT services company CGI is acquiring SCISYS for 254.15p in cash. The offer price represents a 24.6% premium to Thursday’s closing price and values the entire issued and to be issued ordinary share capital of SCISYS at c £78.9m. In addition, SCISYS shareholders will receive the final dividend of 1.73p. The offer price translates to c 20x our FY19 earnings forecast, which falls to c 19x in FY20e and 18x in FY21e. Alternatively, the offer values the business at 1.2x FY20e revenues and 11x EBITDA.
CGI is listed on the Toronto Stock Exchange and the New York Stock Exchange. With a market capitalisation of c $19bn, CGI is a giant in the IT services space. Notably, in 2012 CGI acquired Logica, the LSE-listed UK IT services leader, at a c 60% premium, valuing Logica at c £2bn including debt, or c 0.5x EV/sales.
Business description
SCISYS provides a range of professional services in support of the planning, development and use of computer systems in the space, media/broadcast and defence sectors, as well as to other public and private sector enterprises.