Capgemini to acquire IGATE for $4.4 billion, boost for India operations

In what is said to be one of the largest mergers of two technology giants, French IT colossus Capgemini will acquire a US based technology and service company, IGATE for $4.04 billion, and is expected to be accredited to Capgemini’s operations immediately.

Once the deal was announced, 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.”

The company, which has its presence in nearly 40 countries with almost 145,000 employees, is currently valued at net $14 billion. IGATE headquartered in New Jersey is one of the prominent IT companies in the world, with revenue over $1.2 billion, double-digit growth, 19% operating margin in 2014, and a total global employee talent capital of 33,000.

IGATE has nearly 40 percent of its employees in India, and earns about 80 percent of its revenue from the United States. The company holds a strong position in financial services sector, especially in bank and insurance, complementary to those of Capgemini. This transaction will further consolidate Capgemini’s position as the key player in retail, manufacturing and healthcare sectors.

North America is said to be the largest market for IT services, and Capgemini, which reported 11.7 percent revenue growth in the continent, in the first quarter of 2015, after the merger, will form a major presence in the region. The deal will make North America its largest market, accounting for nearly 30 percent of the combined revenue this year. Making the announcement, the company said, “The combination of IGATE and Capgemini increases the Group’s revenues in the region (North America) by 33 percent to an estimated $4 billion.”

The merger would establish Capgemini as a leading player in technology, consulting and outsourcing, with estimated total revenue of $15.2 billion, combined operating margin above10% and around 190,000 workforces worldwide.

After the deal was done, Ashok Vemuri, CEO of IGATE, said, “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.”

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