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Capgemini buys Altran for 3.6b euros to expand in tech
CAPGEMINI SE said it will acquire Altran Technologies SA in a 3.6 billion-euro (S$5.6 billion) deal in order to win more tech clients and keep up with rivals.
Paris-based Capgemini is looking to maintain its position as a major IT consultancy in a consolidating industry, as competitors such as Accenture have been building out their sales from digital projects.
Capgemini's shares rose as much as 8 per cent in early morning trading in Paris on Tuesday, the most since October 2011. Altran rose 21 per cent to 13.9 euros, trading just below the 14 euros-a-share offer price.
Analysts broadly backed the deal. "We think this deal should bring strong value creation and provides scale that can help Capgemini close the valuation gap to larger rivals such as Accenture," said Neil Campling, analyst at Mirabaud.
The 14 euros-a-share cash portion of the deal amounts to 3.6 billion euros excluding net debt of 1.4 billion euros, the companies said in a statement on Monday. The offer is a 22 per cent premium to Altran's closing price on Friday. The proposal is a "positive step, as it looks to significantly expand into R&D and engineering, two areas becoming main growth drivers for IT-outsourcing companies," said Anurag Rana, a Bloomberg Intelligence analyst. "The deal would enable Capgemini to compete more aggressively with Accenture, which generates more than 60 per cent of sales from digital projects."
When combined, Capgemini and Altran - also based in Paris - will be able to help clients in areas such as cloud computing, the Internet of Things, 5G, and artificial intelligence software, Capgemini chief executive officer Paul Hermelin said in a statement. In an interview with Bloomberg TV, Mr Hermelin noted that Altran adds "beautiful accounts" such as Intel Corp, Cisco Systems Inc and Microsoft Corp, but added that the group still needed to develop its business in Asia.
The combination of the two companies will result in a group with 17 billion euros in annual revenue and more than 250,000 employees.
Mr Hermelin expressed confidence on a conference call on Monday that there are no antitrust issues associated with the takeover since "the market is very fragmented".
Still, the companies' businesses do overlap, as they provide some of the same services to similar industries. BLOOMBERG