Paris, Oct. 26 (Reuters): IT consultancy Capgemini is buying technology services group Kanbay International for $1.25 billion to accelerate its growth in India and bolster its position in finance consulting and in North America.

Capgemini, Europe’s largest IT consultancy, said the acquisition of US-listed Kanbay would boost its earnings and margins.

“With this deal, we will accelerate our long-term (margin recovery) plan,” chief executive Paul Hermelin told a conference call.

“The market banks on a 2008 (operating) margin. We will top that. We then want to lift our margin above 10 per cent while limiting the group’s cyclical exposure.”

Capgemini also unveiled a forecast-beating 13.5-per cent rise in third-quarter sales on Thursday but its shares trailed in negative territory after initially rising.

By 0903 GMT, the stock was down 1.3 per cent at 43.47 euros, underperforming the DJ Stoxx European technology sector.

Analysts said the deal made sound strategic sense but looked expensive although it was not out of step with recent deals in India.