Logica, the UK’s largest IT services provider, has agreed to an acquisition bid from Canadian IT company CGI worth £1.7 billion.

The news follows two years of sluggish performance at Logica. In 2011, it grew revenues by just 3% to £3.9 billion and its operating profit fell 74%. In December, the company announced 1,300 jobs cuts. By contrast, CGI grew by 19% to C$4.3 billion (£2.6 billion) last year.

The Canadian company said this acquisition will create a “global technology champion with significant presence throughout the Americas, Europe and Asia”. Logica said it would “meets clients’ requirements for a more comprehensive international presence and offers them the benefits of scale”.

CGI’s offer represents a 60% premium on Logica’s market capitalisation. Before the acquisition bid was announced, Logica’s share price was less than half what it was a year ago.

Bloomberg quoted investment analysts Singer Capital as saying: "We believe this is a good fit and believe there is a low likelihood of a competing offer.”

"CGI had been looking for some time to acquire in Europe … to become a major player in Europe," wrote Rachael Stormonth, senior vice president at business process outsourcing analyst company Nelson Hall.

She added that the company is believed to have "looked at" acquiring Logica several times already, but has held off on the price.

UK technology industry analyst Richard Holway, of TechMarketView, lamented the loss of yet another British IT company to a foreign acquirer.

“The initial reaction is one of major sadness as yet another of the large and long established names from the UK’s strong technology background is acquired by an overseas predator,” he wrote. “Indeed, the UK now has no UK-HQed pure [software and IT services] players in the Top Ten suppliers to the UK market.”