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December 2, 1993

LET’s CALL THE WHOLE THING OFF SAY FRANCE TELECOM, CAP

By CBR Staff Writer

Cap Gemini Sogeti SA and France Telecom are no longer pursuing their two-year-long discussion of the possibility for the state phone operator taking a stake in the software and services company, La Tribune-Defosses reports. Michel Huet, managing director of FTLIS, France Telecom’s software division, confirmed that the dossier has been closed again and that if they resume, it will not be on our initiative. It seems three obstacles stood in the way of an agreement, the first being price: France Telecom was not prepared to pay the same generous $76 per share paid by Daimler-Benz AG in 1991, on grounds that business was deteriorating – indeed the shares are now trading $29.80. France Telecom would also have opposed any takeover attempt by Cap Gemini of the Anglo-French software house Sema Group Plc, in which it holds 19.5%. Cap Gemini has 28.2% of Sema, but has always denied talk of a full bid. And with its stake in Sema, France Telecom could not reconcile taking shareholdings in both companies. We can’t take a stake in every French software and systems house, Huet commented. Cap Gemini is now forecast to lose $50m to $70m this year, and to make losses next year.

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