If the deal with Unilog is financed entirely by shares holdings will be diluted LogicaCMG's shares ended down 5

If the deal with Unilog is financed entirely by shares, holdings will be diluted LogicaCMG's shares ended down 5.49 per cent at 168p. Mark Bryan, an analyst at Deutsche Bank, said: "Valuation is relatively full. That said, the strategic importance of building in France balances the valuation. Unilog has 80 per cent of its business in France and specialises in consulting, outsourcing, systems integration and training It also has a substantial presence in Germany. Analysts were viewing Unilog yesterday as an attractive strategic buy for LogicaCMG, despite the price tag of about 20 times 2006 earnings estimates. Unilog had sales of €657.4m last year and an operating margin of 11 per cent, beating an average of 8 to 9 per cent for the sector.

Last month, Martin Read, LogicaCMG's chief executive, said the company needed to be bigger in France and would consider acquisitions to boost its size. LogicaCMG's French division is small and loss-making in the face of competition from larger rivals such as Cap Gemini Losses in the first six months of the year doubled to £3.7m. "The board of LogicaCMG confirms it is in advanced discussions with Unilog which may or may not lead to an offer being made for Unilog on an agreed basis," the company said. Unilog, whose clients include European blue-chip companies such as France Telecom, Vivendi and BNP Paribas, would dramatically increase the scale of LogicaCMG's operations in France and Germany. In a statement, the company said it was in "advanced discussions" with Unilog over a takeover at €73 (£49) a share, valuing the French business at €938m.

Mr Murdoch turned to him and said: "With all due respect, Charles, I know what the numbers are and you're dead wrong.". LogicaCMG, the IT services group, revealed yesterday it was on the verge of a £636m takeover of its French rival Unilog, to try to ramp up its presence in continental Europe. Brussels is seeking to limit the number of games that Sky can have. ITV's Mr Allen has recently suggested that the £340m a year that Sky paid last time to clinch all the football rights was below the odds.