Cap Gemini Group, Europe's largest computer services company, has seen first half profit almost doubled, thanks to a number of European mergers, requiring companies to integrate their systems.
The Paris based company earned FF874 million (€133.2 million), up from FF454 million up to the end of June this year. Without including one time gains, profit rose 59 per cent to FF706 million. Revenue increased 16 per cent over the same period in 1998 to FF14.4 billion.
Cap Gemini said business has increased significantly as a result of European mergers. The services company, however, has lowered its full year sales forecast by FF1 billion to about FF30 billion, to account for an expected delay in technology investments as companies prepare their systems for Y2K.
European mergers and acquisitions grew a massive 65 per cent to a value of about $692 billion in the first half, according to Cap Gemini, as lower interest rates and the introduction of the euro created new capital to finance takeovers. Cap Gemini may buy full ownership of its Dutch unit, the most profitable in recent times.
This would give it the freedom to grow its business without having to justify each decision to a small number of minority shareholders. Once Cap Gemini has put its European house in order, analysts are expecting it to launch an acquisition attack on the US.
In April, Cap Gemini agreed to buy Beechwood, a US telecommunication systems specialist, for about $200 million in cash to expand its services to the phone industry and add US clients. The services company is thought to be in talks with other US services companies with a view to further acquisitions.
Cap Gemini has said that it plans to develop its business to include the growing need for Internet and ecommerce applications in Europe.
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