French IT firm Cap Gemini to buy U.S. rival IGATE for $4 billion

Mon Apr 27, 2015 12:31pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Emelia Sithole-Matarise and Cyril Altmeyer

PARIS (Reuters) - Cap Gemini SA (CAPP.PA: Quote), a French information technology services company, said it will buy U.S.-based rival IGATE Corp IGTE.O for $4 billion in a deal that would make North America into its biggest market and hand IGATE's founders a $1 billion windfall.

Cap Gemini also raised its 2015 sales forecast on Monday in a statement that was pushed up to coincide with the announcement of the deal. Its shares climbed nearly 8 percent.

IGATE, which has strength in the financial services sector, has grown quickly since its 1996 stock market listing.

Cap Gemini said IGATE has been recording double-digit growth and a 19 percent operating margin. Its 2014 revenue was $1.3 billion.

The acquisition would significantly bolster the French company's presence in North America.

IGATE does about 80 percent of its business in North America, and would represent 30 percent of the combined group's estimated 2015 revenue of 12.5 billion euros ($13.58 billion).

The deal would enhance earnings by 12 percent in 2016 and 16 percent in 2017, according to Cap Gemini. The combined group's operating margin would be above 10 percent.

Cap Gemini, whose market capitalization was about 13 billion euros ($14 billion) at the close of business on Friday, said it would pay $48 a share for IGATE. The U.S. company's shares added 3.5 percent to $47.45 on Monday.   Continued...

A view shows the Indian headquarters of iGate in the southern Indian city of Bangalore February 4, 2013. REUTERS/Stringer