Capgemini soon to acquire IGATE

The French Multinational Firm, Capgemini is planning to buy  IGate – the US based IT Corp for $4 billion. This will make North America its biggest share of the market.

The firm to be acquired, that is, IGATE is an ITES ( information technology and services) firm with a stronghold in retail, heathcare and manufacturing. The company undoubtedly is in its growth phase. The company’s turnover in 2014 amounted to 1.3 billion dollars. A major chunk of operations of IGATE are based out of North America.The company has 19% operating margin.

North America indeed is the largest and most innovative technology and services market in the world. In the acquisition, the financing would be done through a combination of Capgemini’s own cash, debt and equity. The equity part would not be more than 6% of the company’s total share capital. The deal was backed by Capgemini’s shareholders as well. These sharehoders would represent 54% of the total share capitala of the US based company. The deal is expected to increase earnings by 12% by 2016 & 16% in 2017.

The French Multinational quoted that the sales showed a growth of 10.5% in the first quarter and hence increased the growth target of 2015 to minimum 5 % compared to the previous 3%. However, the deal requires approvals from regulatory authorities. The deal is expected to close down in the second half of 2015.

This acquisition will provide strength to Capgemini’s business, mainly the application and infra ones.

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