Logica, the British technology firm that employs 500 people in the Republic, agreed a €791 million takeover of Anglo-Dutch rival CMG yesterday to create Europe's third-largest computer services company by revenue.
Logica said it would own 60 per cent of the new company after the all-share deal and that its chief executive, Mr Martin Read, would take that role in the firm, which would be called LogicaCMG.
The acquisition will mean 1,400 job cuts or 6 per cent of the enlarged company's workforce. But it remains unclear whether this will affect Logica's Irish workforce, which has already undergone major restructuring this year.
A Logica spokesman said no decision had yet been taken on where the job cuts would be made. The company employs 400 to 500 people in Dublin, and the enlarged group has some 24,000 employees.
The job cuts will cost the company £80 million (€125 million) in a once-off charge, and will help deliver annual savings of about £60 million by the end of 2004.
Ranked behind just two firms, Cap Gemini Ernst & Young and Atos Origin in Europe, the new firm will have critical mass in an increasingly fierce market. Analysts said the deal should enable LogicaCMG to compete better against the likes of Finland's Nokia and Sweden's Ericsson for multimedia messaging services.
"The deal underscores that the outlook is pretty dire," said Mr Rob Sellar, a fund manager at Aberdeen Asset Management. "Logica would not have picked up CMG if they thought the outlook would improve in the next four to five months."
