Cap Gemini Sogeti SA’s capital reconstruction has not gone down well with Standard & Poor’s Corp, which lowered its long-term rating on the company’s senior debt to triple-B-minus from triple-B. The outlook is now stable. The action assumes approval of the merger by the US Federal Reserve Bank, given Deutsche Bank’s 24% stake in Daimler Benz AG, which will own 24.9% of the new entity through its service subsidiary, Debis. Apart from Daimler, major shareholders are French conglomerate Compagnie Generale d’Industrie et de Participations SA with 24.8% and the founder, Serge Kampf with 20%. The new entity will fully consolidate Gemini Consulting (34%-owned by Cap Gemini, 66%-owned by Sogeti before the merger). The downgrade primarily reflects the negative impact of the absorption of Gemini Consulting on the new entity’s business risk profile. While still growing in Europe, the consulting firm experienced an abrupt fall in its US revenues in 1995. In addition, Cap Gemini faces intensifying competition in the European service market, Standard & Poor’s said. The rating anticipates that it will grow its facilities management and systems integration businesses and consequently steadily improve its margins, the agency concluded.
