Capgemini to acquire US-based outsourcer IGATE for $4 billion

New York, Apr 27: French IT services firm Capgemini today said it will acquire US-based outsourcer IGATE for USD 4 billion, a move that will help the former strengthen its foothold in the North American market. Under the merger agreement, Capgemini will acquire the Nasdaq-listed firm for a cash consideration of USD 48 per share and the transaction will amount to USD 4 billion, Capgemini said in a statement.The combined revenue of the merged company is estimated at 12.5 billion euros in 2015 and around 1.9 lakh employees. Interestingly, IGATE had bought India’s Patni Computer Systems in 2011 in partnership with private equity giant Apax Partners in a USD 1.2 billion deal. In November, Apax converted its debt in the company into equity and made a filing with the US Securities and Exchange Commission to have the option to sell its entire stake.This transaction, which is expected to close in the second half of 2015, will be financed through a combination of cash and equity. Capgemini said the transaction fulfils one of the essential components of its strategy in expanding its presence in the North American market.The new organisation will be in place within three months of closing and the integration is expected to be completed within nine months.“It will give us a new status on the American market… 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,” Capgemini Chairman and CEO Paul Hermelin said. The combination of IGATE and Capgemini increases the Group’s revenues in the region by 33 per cent to an estimated USD 4 billion, making North America its first market with about 30 per cent of the pro-forma combined revenues in 2015.