Capgemini says iGate’s strength in North America will complement its European focus. iGate has most of its 33,000 staff in India, including a large chunk at its Navi Mumbai campus
New York : French IT services company Capgemini will buy IGATE Corp — a US-based company with a large presence in India — for USD 4 billion in cash to create an entity with a combined revenue of USD 14 billion to take on rivals like IBM.
The acquisition will give Capgemini access to IGATE’s customers like General Electric and Royal Bank of Canada and boost its US-generated business to 30 per cent of its total revenue and make North America its largest market. Capgemini will offer USD 48 for every IGATE share as part of the definitive merger agreement, 4.7 per cent more than the IGATE stock’s Friday closing price of USD 45.85 on the Nasdaq stock exchange, the firm said in a joint statement.
New Jersey-based IGATE — an applications, network and business process outsourcing specialist — will also help Capgemini expand in infrastructure services, healthcare, retail and manufacturing markets. Capgemini and IGATE would together have combined annual revenue of 12.5 billion euros (USD 14 billion) this year. The merged group would have around 1,90,000 employees and an operating margin of 10 per cent.
About 27,000 of the workforce will be based in India and another 50,000 in the US. North America will represent 30% of the estimated combined revenue.
Capgemini has around 145,000 employees, including some in India. Capgemini said iGate’s strength in North America will complement its European focus. iGate gets about 79% of its $1.3 bln revenue from North America. iGate has most of its 33,000 staff in India, including a large chunk at its Navi Mumbai campus, and is listed on the New York Stock Exchange.
Capgemini has for some time been targeting an expansion of its presence in North America, which it says is the most innovative technology and services market in the world.
Capgemini Chief Executive Paul Hermelin said the company doesn’t plan any more major acquisitions in the coming two years.
IGATE was founded in 2006 by two Indians Ashok Trivedi and Sunil Wadhwani. IGATE is headed by former Infosys executive Ashok Vemuri. IGATE had acquired Mumbai-based Patni Computer Systems in 2011 for around USD 1.22 billion.
“In Capgemini, we have found a partner that will advance our ability to innovate and build industry solutions that will enhance the value proposition we bring to our clients. In addition, this powerful combination will provide exciting opportunities for our employees to expand their capabilities,” Vemuri said.
