Cap Gemini Sogeti SA, Europe’s largest independent computer services company, came to a crossroads on January 31 1996. The company had completed its first profitable year since 1991 and for the first time in three years, revenues were growing. But the January deadline spelt a fundamental change in ownership, a move designed to build a […]
Cap Gemini Sogeti SA, Europe’s largest independent computer services company, came to a crossroads on January 31 1996. The company had completed its first profitable year since 1991 and for the first time in three years, revenues were growing. But the January deadline spelt a fundamental change in ownership, a move designed to build a pan-European services giant, but which entailed the company losing control over its destiny after 29 years under the team monarchy of founder Serge Kampf. German car manufacturer Daimler-Benz AG – and, indirectly, its debis Systemhaus services subsidiary (CI No 3,048) – acquired control of more than one fifth of Cap Gemini’s shares back in 1991, and the agreement had given Daimler-Benz five years to take up an option to increase its Cap Gemini interest to a majority holding. While it did not exercise its option in full, at the January 1996 deadline the company upped its holding to 24.5%, making it Cap Gemini’s joint largest shareholder along with CGIP Compagnie Generale d’Industrial et de Participations SA, the French industrial conglomerate. Kampf’s ownership was diluted to around 19%, with 32% held publicly. The deal also ushered in a degree of power sharing that puts debis firmly in the driving seat. Debis chairman Klaus Mangold is now installed as chairman of Cap Gemini’s shareholders board, leaving Kampf in charge of the company’s management committee. For Cap Gemini – and Kampf – the move is both defensive and forward looking. For a long time Kampf has voiced the opinion that Europe needs to spawn a global services vendor large enough to stand alongside the services superpowers of Electronic Data Systems Corp, Computer Sciences Corp and IBM Corp in the region. The close alignment with debis goes a long way to achieving that. Together, the two companies have revenues of some $3.4bn, a figure boosted by Cap Gemini’s revived financial performance. In 1995, Cap Gemini’s net profits hit the equivalent of $9.9m, up from a loss in the previous year of $17.9m, as revenues rose 11% to $2.20bn. That may still be well below the run-rate of many of its peers, but it stands in sharp contrast to the 7% revenue decline Cap Gemini experienced in each of its two previous fiscal years. Much of the credit for that turnaround has been attributed to its Genesis business re- engineering program instigated in early 1993. Genesis grouped industry expertise in seven geographic regions, each with trans- national responsibility for specific industries. Genesis also re-oriented Cap Gemini’s services towards popular packaged software products, such as SAP AG’s R/3 and Oracle Corp’s Oracle Applications. Kampf hopes that Genesis and the ‘co-opetition’ merger with debis will provide Cap Gemini with the ammunition and firepower that will be necessary to help it to compete with the technical and financial superiority of the Americans.