PARIS Sopra (SOPR.PA) said on Tuesday it planned to take over rival Steria TERI.PA in a friendly all-stock deal that would create a French IT services group with revenue of more than 3.1 billion euros ($4.3 billion).
Steria shareholders would receive one Sopra share for four Steria shares held, with an exchange value of 22 euros per Steria share, the companies said, implying a deal value of about 730 million euros based on Steria's 33.2 million listed shares.
The combined group, which would have some 35,000 employees in 24 countries, would be stronger able to compete with market leaders IBM (IBM.N), Capgemini (CAPP.PA) and Atos (ATOS.PA), the companies said in a presentation.
"The deal makes strategic sense," a Paris-based trader said, noting that Sopra had a strong footprint in France whereas Steria had good exposure to international markets, particularly Britain and Germany.
Shares in both companies have been suspended from trading since Monday pending the announcement. Steria has a market value of 520 million euros, while Sopra is worth 1.02 billion.
The offer, which has been approved by the boards of both companies, represents a 40 percent premium to the April 4 closing price of Steria, the companies said.
The resulting group will be presided by Sopra's current founder and president Pierre Pasquier, while Steria boss Francois Enaud will become its chief executive.
The tie-up should generate operational savings of 62 million euros a year starting in 2017, the companies said. It would have a neutral effect on basic earnings per share in 2015 and strongly boost earnings from 2016.
The combined group aims for revenue above 4 billion euros and an operating margin gradually improving towards 10 percent, the companies added.
($1 = 0.7277 Euros)
(Reporting by Natalie Huet and Alexandre Boksenbaum-Granier; Editing by James Regan)