CGI announces intent to acquire Aeyon for expansion of offerings portfolio and presence across U.S. Government agency missions

Rhea-AI Summary

CGI Federal Inc., a subsidiary of CGI Inc. (NYSE: GIB, TSX: GIB.A), has announced its intent to acquire Aeyon, a leader in digital transformation and AI technologies for the U.S. Federal Government. The acquisition aims to expand CGI's offerings portfolio and strengthen relationships with critical national security clients. The deal, expected to close in Q4 of CGI's fiscal year 2024, will bring 725 Aeyon employees into the CGI fold, enhancing their capabilities in government transformation.

The merger is set to benefit clients through access to new global capabilities and opportunities to enhance mission impact. For Aeyon employees, it offers career advancement prospects with an industry leader. The acquisition aligns with CGI's strategy of delivering innovative, trusted digital transformation, data, and intelligent automation services to government clients.

Positive

• Expansion of CGI's offerings portfolio in digital transformation and AI technologies
• Strengthening relationships with critical national security clients
• Addition of 725 experienced Aeyon employees to CGI's workforce
• Enhanced capabilities in government transformation services
• Potential for increased market share in U.S. Federal Government contracts

Negative

• Regulatory approvals and closing conditions may delay or prevent the acquisition
• Potential integration challenges and costs associated with merging the two companies

Financial Analyst

CGI Federal's intent to acquire Aeyon marks a strategic move to bolster its presence in the U.S. government sector, particularly in digital transformation and AI technologies. This acquisition is poised to have several significant implications:

• Market Expansion: The deal will enhance CGI's relationships with critical national security clients, including the Office of the Secretary of Defense, U.S. military branches, FAA and NASA. This expanded client base could lead to increased revenue streams and market share in the government sector.
• Talent Acquisition: The addition of 725 Aeyon employees with specialized expertise in government transformation will significantly strengthen CGI's human capital, potentially leading to improved service delivery and innovation.
• Service Portfolio Enhancement: Aeyon's capabilities in data management, analytics and intelligent automation will complement CGI's existing offerings, potentially opening up new revenue opportunities and increasing competitiveness in the federal IT services market.
• Financial Impact: While specific financial details are not disclosed, acquisitions of this nature often lead to revenue synergies and potential cost efficiencies in the medium to long term. Investors should watch for updates on integration progress and any revised financial guidance in upcoming earnings calls.

The deal's closure in Q4 of CGI's fiscal year 2024, subject to regulatory approvals, suggests a near-term impact on the company's financial statements. Investors should monitor for any changes in CGI's debt structure or cash position that might result from this acquisition.

Tech Expert

The acquisition of Aeyon by CGI Federal represents a significant move in the government IT services landscape, particularly in the realm of advanced technologies. Here's a breakdown of the tech implications:

• AI and Automation Focus: Aeyon's expertise in Artificial Intelligence and intelligent automation aligns with the growing demand for these technologies in government operations. This acquisition positions CGI to capitalize on the increasing government spending on AI initiatives, which is expected to reach $1.2 billion in fiscal year 2024, according to the U.S. federal budget.
• Data Management and Analytics: The emphasis on data capabilities suggests CGI is preparing for the era of data-driven government decision-making. This aligns with the federal government's Data Strategy, which aims to leverage data as a strategic asset.
• Digital Transformation Acceleration: By combining forces, CGI and Aeyon are likely to accelerate digital transformation projects across various government agencies. This could lead to more efficient, cost-effective and innovative government services.
• Competitive Edge: The acquisition strengthens CGI's position against other major players in the federal IT services market, such as Booz Allen Hamilton and SAIC. The enhanced tech portfolio could lead to winning more high-value government contracts.

From a technological standpoint, this acquisition positions CGI at the forefront of the government's push towards modernization and digital transformation. It's a strategic move that could yield significant returns as federal agencies increasingly rely on advanced technologies to fulfill their missions.

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www.cgi.com/newsroom

FAIRFAX, Va., July 30, 2024 /PRNewswire/ - CGI Federal Inc. (CGI), the wholly-owned U.S. operating subsidiary of leading global IT and business consulting services firm CGI Inc. (TSX: GIB.A) (NYSE: GIB), today announced its intent to acquire Aeyon, a leader in digital transformation and Artificial Intelligence (AI) technologies, including data management, analytics and intelligent automation for the U.S. Federal Government. The acquisition further complements and expands CGI Federal's offerings portfolio as well as relationships with critical national security clients, such as the Office of the Secretary of Defense, multiple branches and agencies of the U.S. military, the Federal Aviation Administration (FAA) and the National Aeronautics and Space Administration (NASA). The parties entered into a definitive purchase agreement on June 22, 2024, relating to the transaction, which is expected to close in the fourth quarter of CGI's fiscal year 2024, subject to regulatory approvals and other customary closing conditions.

"We look forward to welcoming the 725 Aeyon employees whose deep experience and expertise in government transformation has meaningfully contributed to the missions of U.S. Federal Government organizations," said Stephanie Mango, President, CGI Federal. "CGI and Aeyon share the same values and culture, and the combination of our firms further strengthens our position as a partner of choice for end-to-end services and mission-critical solutions across the U.S. Government."

Aeyon President and CEO, Sunny Singh, commented, "By joining forces with CGI, our clients will benefit significantly from their access to new and complementary global capabilities, greater scale and opportunities to enhance and broaden their mission impact; and for our employees the opportunities to advance their careers with an industry leader are also significant. We are thrilled to combine our capabilities, strengthen our offerings and advance our history of delivering innovative, trusted digital transformation, data, and intelligent automation services and solutions to our clients."

"Together, CGI and Aeyon are a great cultural fit—we share a strong commitment to client missions and our employees and our communities as well as a reputation for delivery excellence and innovation based on deep domain knowledge and technical expertise," said Horace Blackman, Senior Vice-President, CGI Federal Defense and Intelligence. "Our talented consultants are the backbone of our business and we are excited to embrace the world-class Aeyon team members as part of the CGI family." 

In the U.S., CGI has consultants and professionals located in 80 offices organized through a metro market proximity model and supported by the depth of the company's global presence, end-to-end range of services and solutions, and insights to deliver value locally.

Aeyon is backed by Enlightenment Capital, a private investment firm that makes control and strategic, non-control investments in middle market companies in the Aerospace, Defense, Government & Technology (ADG&T) sector.

About CGI Federal

CGI Federal (CGI), a wholly owned U.S. operating subsidiary of CGI Inc., is dedicated to partnering with federal agencies to provide solutions for defense, civilian, healthcare, justice, intelligence, and international affairs missions. Founded in 1976, CGI is among the largest independent IT and business consulting services firms in the world. With 90,000 consultants and professionals across the globe, CGI delivers an end-to-end portfolio of capabilities, from strategic IT and business consulting to systems integration, managed IT and business process services and intellectual property solutions. CGI works with clients through a local relationship model complemented by a global delivery network that helps clients digitally transform their organizations and accelerate results. CGI Fiscal 2023 reported revenue is CA$14.30 billion and CGI's shares are listed on the TSX (GIB.A) and the NYSE (GIB). Learn more at cgi.com

Forward-looking information and statements

This press release contains "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbours. All such forward-looking information and statements are made and disclosed in reliance upon the safe harbour provisions of applicable Canadian and United States securities laws. Forward-looking information and statements include all information and statements regarding CGI's intentions, plans, expectations, beliefs, objectives, future performance, and strategy, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking information and statements often but not always use words such as "believe", "estimate", "expect", "intend", "anticipate", "foresee", "plan", "predict", "project", "aim", "seek", "strive", "potential", "continue", "target", "may", "might", "could", "should", and similar expressions and variations thereof. These information and statements are based on our perception of historic trends, current conditions and expected future developments, as well as other assumptions, both general and specific, that we believe are appropriate in the circumstances. Such information and statements are, however, by their very nature, subject to inherent risks and uncertainties, of which many are beyond the control of CGI, and which give rise to the possibility that actual results could differ materially from our expectations expressed in, or implied by, such forward-looking information or forward-looking statements. These risks and uncertainties include but are not restricted to: risks related to the market such as the level of business activity of our clients, which is affected by economic and political conditions, additional external risks (such as pandemics, armed conflict, climate-related issues and inflation) and our ability to negotiate new contracts; risks related to our industry such as competition and our ability to develop and expand our services, to penetrate new markets, and to protect our intellectual property rights; risks related to our business such as risks associated with our growth strategy, including the integration of new operations, financial and operational risks inherent in worldwide operations, foreign exchange risks, income tax laws and other tax programs, the termination, modification, delay or suspension of our contractual agreements, our expectations regarding future revenue resulting from bookings and backlog, our ability to attract and retain qualified employees, to negotiate favourable contractual terms, to deliver our services and to collect receivables, to disclose, manage and implement environmental, social and governance (ESG) initiatives and standards, and to achieve ESG commitments and targets, including without limitation, our commitment to net-zero carbon emissions, as well as the reputational and financial risks attendant to cybersecurity breaches and other incidents, and financial risks such as liquidity needs and requirements, maintenance of financial ratios, interest rate fluctuations and the discontinuation of major interest rate benchmarks and changes in creditworthiness and credit ratings; as well as other risks identified or incorporated by reference in this press release, in CGI's annual and quarterly MD&A and in other documents that we make public, including our filings with the Canadian Securities Administrators (on SEDAR+ at www.sedarplus.ca) and the U.S. Securities and Exchange Commission (on EDGAR at www.sec.gov). Unless otherwise stated, the forward-looking information and statements contained in this press release are made as of the date hereof and CGI disclaims any intention or obligation to publicly update or revise any forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. While we believe that our assumptions on which these forward-looking information and forward-looking statements are based were reasonable as at the date of this press release, readers are cautioned not to place undue reliance on these forward-looking information or statements. Furthermore, readers are reminded that forward-looking information and statements are presented for the sole purpose of assisting investors and others in understanding our objectives, strategic priorities and business outlook as well as our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Further information on the risks that could cause our actual results to differ significantly from our current expectations may be found in the section titled Risk Environment of CGI's annual and quarterly MD&A, which is incorporated by reference in this cautionary statement. We also caution readers that the above-mentioned risks and the risks disclosed in CGI's annual and quarterly MD&A and other documents and filings are not the only ones that could affect us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation.

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SOURCE CGI Inc.

FAQ

What is the purpose of CGI's acquisition of Aeyon?

CGI is acquiring Aeyon to expand its offerings portfolio in digital transformation and AI technologies, and to strengthen its relationships with critical national security clients in the U.S. Federal Government sector.

How many employees will CGI gain from the Aeyon acquisition?

CGI will welcome 725 Aeyon employees as part of the acquisition, bringing their expertise in government transformation to the company.

When is the CGI-Aeyon acquisition expected to close?

The acquisition is expected to close in the fourth quarter of CGI's fiscal year 2024, subject to regulatory approvals and other customary closing conditions.

Which key clients will CGI gain access to through the Aeyon acquisition?

The acquisition will expand CGI's relationships with critical national security clients, including the Office of the Secretary of Defense, multiple branches of the U.S. military, the Federal Aviation Administration (FAA), and NASA.

How will the Aeyon acquisition affect CGI's stock (GIB)?

While the direct impact on CGI's stock (GIB) is not specified, the acquisition is expected to strengthen CGI's market position and potentially increase its competitiveness in the U.S. Federal Government sector, which could positively influence the stock performance.