Paris, Bridgewater, NJ: Europe's biggest IT services consultancy Capgemini has entered into a definitive agreement to acquire IGATE for a cash consideration of $48 per share or around $4.0 billion.
As a result of this acquisition North America becomes the largest region of Capgemini's business.
- North America to represent 30% of the Group's estimated combined revenues of €12.5bn in 2015
- Enhances Capgemini's competitiveness across all regions and broadens its offerings in key verticals
- Global delivery centers headcount to cross the 100,000 employees mark in 2015 competing on par with the best industry leaders
- Provides a global reach and a wider offering portfolio for IGATE's clients and new perspectives for its employees
- Strengthens the economic model of the Group through revenue synergies and efficiency gains
- Financially attractive: normalized EPS accretion of at least 12% in 2016 and 16% in 2017
IGATE is a prominent US-listed technology and services company headquartered in New Jersey with 2014 revenues of $1.3 billion, double-digit growth and a 19% operating margin. North America is IGATE's largest market representing 79% of revenues in 2014 followed by Europe (14%) and Asia-Pacific (7%).
IGATE strengthens Capgemini's key businesses in application and infrastructure services as well as BPO and engineering services. Moreover, the transaction enriches Capgemini's portfolio with new flagship clients such as General Electric and Royal Bank of Canada.
This transaction would lead to a group with an estimated combined revenue of €12.5 billion in 2015, an operating margin above 10% and around 190,000 employees. The combined Group will pass the 100,000 employees landmark in its Rightshore delivery centers in 2015.
This transaction fulfills one of the essential components of Capgemini's strategy in expanding its presence in the North American market.
Scaling up in North America
Capgemini says that growing its presence in North America, by far the largest and most innovative technology and services market in the world, is at the top of its strategic agenda. The combination of IGATE and Capgemini increases the Group's revenues in the region by 33% to an estimated $4 billion, making North America its first market with approximately 30% of the pro-forma combined revenues in 2015. An estimated 50,000 employees will be servicing Capgemini's North American clients.
Reinforcing sector expertise notably in financial services
With its established position in the financial services sector (42% of revenues), IGATE brings an attractive portfolio of major clients complementary to those of Capgemini. This transaction also reinforces Capgemini's position in the retail, manufacturing and healthcare sectors, and prompts a faster transition to platform-based solutions.
Paul Hermelin, Chairman and CEO of Capgemini, said: "I am very pleased to announce a very important transaction in Capgemini's history. IGATE is a leading company that perfectly fits our strategic ambition. It will give us a new status on the American market, and take further our industrialization journey to offer ever more competitive services to our clients. This will also give to the Group's Indian operations a new scale, allowing us to compete on par with the best US-based and Indian-based companies. I am glad to welcome new talents and leaders to our Group, who share our convictions and professional culture."
Ashok Trivedi, Co-Founder and Co-Chairman of IGATE said: "We are pleased to have found a great partner for the business and are confident that our employees and customers will benefit from the enhanced service offerings and resources available to them at Capgemini."
The merger is subject to the customary closing conditions, including regulatory approvals. The transaction is expected to close in the second half of 2015.
This transaction will be financed through a combination of:
- own cash
- equity portion translating into a dilution not to exceed 6% of Capgemini share capital
- straight debt for the remaining portion.