PARIS (AFP) - Shares in French technology consulting and outsourcing group Capgemini soared in early trading as investors weighed a report, later denied by the company, which claimed that the company was considering a sale of its struggling business in North America.
Shortly after the opening of trading here, Capgemini shares were up 1.02 euros or 4.27 percent at 24.85 euros, while the CAC-40 index slipped lower.
Capgemini chief executive Paul Hermelin later said the company had no plans to sell its business in North America, denying a report in The New York Times, according to a Capgemini spokesman.
"Capgemini denies having begun the process of the sale of its North American activities," the spokesman quoted Hermelin as saying, adding that the company was focused on improving its operations in the region.
After the company denied the report, its shares were still showing a gain of 0.85 euros or 3.56 percent at 24.72 euros.
The New York Times, quoting executives close to the company, had reported that Capgemini was considering a sale of its North American business.
The French technology consulting and outsourcing group bought the consulting business of accountants Ernst and Young for 11.1 billion dollars in stock and cash in February 2000.
A sale now might not reap even one billion dollars, the newspaper added.
While a final decision about a sale has not yet been taken, Capgemini has begun quietly canvassing for potential buyers, the executives said.
Dexia Securities analyst Richard Nguyen said such a move would allow the company to withdraw from a loss-making business and to concentrate on the European market.
"The company's plans to expand to the US have failed and the sale of this business would be a logic transaction," he said.
Dexia Securities maintains its 'underperform' rating with a share price target of 20 euros.
"However, Capgemini will continue to face increased competition in Europe, especially from Atos Origin," Nguyen said, referring to a French-Dutch rival.
11/19/2004 - 12:33 GMT - AFP