S&P: Cap Gemini unaffected

Standard & Poor's said its ratings and outlook on Cap Gemini SA (BB+/positive) were unaffected by the company's offer to acquire Kambay Inc.

Although the $1.3 billion cash outlay is higher than S&P's previous expectations for Cap Gemini's cash acquisition spend, the agency said it takes comfort from, and attach importance to, management's statement that it is considering raising up to €500 million of equity to rebuild room for further possible consolidation. Cap Gemini had consolidated gross cash of more than €2.2 billion at June 30.

In S&P's view, the transaction will strengthen Cap Gemini's offshore delivery capability and commercial impact with the financial services sector. Kambay also has a significantly higher operating margin of 11.1%, compared with Cap Gemini's 4.8% in the first half of 2006. The agency also expects Cap Gemini to continue to take steps to mitigate structural subordination for parent company bondholders.

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