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July 18, 1990


By CBR Staff Writer

At last the waiting is over – Hoskyns is to go to the French software and services company Cap Gemini Sogeti SA. However, the two have certainly not rushed into each others arms and are still remaining rather aloof from each other, although all six of Hoskyns’ conditions have been met. The offer by Cap Gemini is, as Hoskyns chairman Geoff Unwin puts it, rather unusual. He says that the initial offer of 330 pence a share is a good one (it gives Cap Gemini a 70% stake for UKP199m, valuing the entire company at UKP286m), but has reservations about the 1993 offer. The latter offer will be made within three months of Hoskyns announcing its results for the year ending October 31, !992 and will be for the rest of Hoskyns’ shares. Not that he thinks the price is unfair – the 1993 offer will be a cash offer of either the earnings per share multiplied by 23, or 469 pence per share, subject to a maximum price of 660 pence. But Unwin, and his advisors from Schroders, believe that it leaves them in the difficult position of being unable to recommend the offer because the risks and returns of recommending on a forecast are almost impossible to assess. None of the Hoskyns directors will be selling their shares, which represent 0.8% of Hoskyns current issue. Nevertheless Unwin says that Cap Gemini is absolutely a company that Hoskyns can work with. Whether Hoskyns employees share that view is difficult to assess, but Cap Gemini is certainly going to extraordinary lengths to retain them. To start with Cap Gemini is guaranteeing the Hoskyns listing on the Stock Exchange until 1993.


This is clearly a move to safeguard Hoskyns’ employee share options. On top of this move Cap Gemini is offering the opportunity to Hoskyns executive shareholders to take a five year share option at 330 pence over two new Hoskyns shares for every option they keep hold of. Should Cap Gemini take total control of the company these options would roll over into Cap Gemini shares. When Plessey acquired Hoskyns it set up a senior executive trust to retain senior Hoskyns employees and Cap Gemini is doing the same thing – setting aside shares for senior executives which they will earn depending on continued employment. Unwin was unclear about how the two companies would operate together. The official statement says that Cap Gemini will continue the expansion of Hoskyns in the UK and beyond by making acquisitions (vulnerable UK software companies may, however, have earned themselves a breathing space in the short term as Cap Gemini takes stock of Hoskyns). While Hoskyns is listed, all transactions between the two companies will take place on an arm’s-length basis, although this is qualified to some extent by the statement that there may be a transfer of small businesses between the two before 1993. Unwin says that Hoskyns will definitely retain its name and independence until 1993 – thereafter it will presumably be swallowed by Cap Gemini. Following the acquisition, Cap Gemini chairman Serge Kampf will join the Hoskyns board as will two other members of the Cap Gemini board, while Unwin will become a member of Cap Gemini’s executive committee. The advice Hoskyns is giving shareholders is to make a decision based your view of the likely future success of Hoskyns, and on personal circumstances.

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