Capgemini and iGATE on Monday announced that they have entered into a definitive merger agreement under which Capgemini will acquire iGATE for a cash consideration of $48 per share. According to the company, the transaction will amount to $4 billion and is expected to be immediately accretive to Capgemini’s normalized Earnings Per Share (EPS)1. The deal is considered as one of the largest buy-out in the IT services industry.
“The merger agreement has been approved unanimously by both Capgemini’s and iGATE’s Board of Directors. The transaction has also been approved by the written consent of shareholders holding a majority of iGATE’s shares,” both the firms told in a joint press release.
iGATE is US-listed IT services company headquartered in New Jersey with 2014 revenues of $1.3 billion. North America is iGATE’s largest market representing 79 per cent of revenues in 2014 followed by Europe and Asia-Pacific.
Commenting on the development, 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. ”
With the acquisition, Capgemini bags to 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 per cent and around 190,000 employees.
The combination of iGATE and Capgemini will increases the group’s revenues in the North America region by 33 per cent to an estimated $4 billion, making North America its first market with approximately 30 per cent of the pro-forma combined revenues in 2015. An estimated 50,000 employees will be servicing Capgemini’s North American clients.
Earlier in 2011, iGATE Corporation had acquired a majority stake in Patni Computer Systems Ltd at approximately $1.22 billion, including the mandatory open offer to the public shareholders of Patni.
Sunil Wadhwani, Co-Founder and Co-Chairman of iGATE said: “We are gratified that the company we founded over 25 years ago has developed into a global enterprise with over 30,000 employees, a trusted partner to over 250 clients, a market value of over $4 billion, and one of the most respected brands in the IT industry.”
