IBM Confirms Offer for LGS Group Inc.

The Board of International Business Machines Corporation (IBM) announced on February 29, 2000 its approval of a $19.00-a-share take-over bid for all of the shares of LGS Group Inc. (LGS), a corporation headquartered in Montreal that provides information technology and management consulting services. The bid, which values LGS at approximately $280 million, permits Canadian shareholders who accept the offer to choose either cash or shares of a Canadian company that are exchangeable for IBM shares. Other shareholders can elect to receive either cash or IBM shares. The two principal shareholders of LGS, Raymond Lafontaine and André Gauthier, have entered into a lock-up agreement with IBM.

While somewhat similar outcomes have been achieved through plan of arrangement transactions negotiated with the target, this is believed to be the first time a takeover bid has been used to offer Canadian exchangeables to Canadian holders and related US company shares to US holders.

Ogilvy Renault is acting for the principal shareholders and Osler, Hoskin & Harcourt LLP is acting for IBM. The Ogilvy Renault team is comprised of Guy Fortin, Christine Dubé, Dominique Fortin, Denis Gascon and Sébastien Gingras from the Montreal office and Terry Dobbin, Kenneth Snider, Michael Matheson and Ruth Wahl from the Toronto office. The Oslers team was lead by the Toronto office team of John Kazanjian and Frank Turner (M&A) and Monica Biringer (Tax) who worked with Cravath, Swaine & Moore in New York and with IBM Canada senior corporate counsel Helen Aston and manager of tax strategy John Pelton. The LGS board has retained Sidney Horn and Joseph Jarjour of Goodman Phillips & Vineberg (Montreal).


Francis J. (Frank) Turner Kenneth J. Snider Ruth I. Wahl Guy Fortin Denis Gascon Michael D. Matheson Joseph Jarjour Terence S. Dobbin Christine Dubé Sidney M. Horn Dominique Fortin Helen T. Aston Sébastien Gingras Monica E. Biringer


Davies Ward Phillips & Vineberg LLP Cravath, Swaine & Moore LLP Osler, Hoskin & Harcourt LLP Norton Rose Fulbright Canada LLP