Global IT Anglo-Dutch services firm Logica, whose clients include companies such as BT, Shell, BAE Systems has recommended a £1.7 billion takeover offer by Canadian CGI Group Inc.

Logica has suffered from setbacks from the European economic downturn, which has seen many of the company’s key clients including government public sectors reduce IT spending in order to make cost-savings.

If the offer is accepted CGI will see their sales and staff numbers rise by over double and place the company in direct competition with firms such as Accenture, Cap Gemini and IBM. Rival offers should also not be ruled out from Indian companies looking at European expansion.

Logica chairman David Tyler said: "Given the very limited geographic overlap and CGI's strong reputation for successful integration, we believe this transaction will offer great opportunities for Logica's people."