Capgemini Enlarges North American Presence With IGate Buy

 
 
By Chris Preimesberger  |  Posted 2015-04-27 Print this article Print
 
 
 
 
 
 
 

Important logic for the deal is that the transaction brings Capgemini IGate's flagship clients, which include General Electric and Royal Bank of Canada.

Paris-based IT consulting and outsourcing giant Capgemini revealed April 27 that it will acquire a major U.S. competitor, IGate, for about $4 billion, or $48 per share.

This transaction will result in an enlarged multinational company with an estimated combined revenue of $13.6 billion in 2015, an operating margin above 10 percent and about 190,000 employees.

IGate strengthens Capgemini's global reach in key businesses such as application and infrastructure services, business-process outsourcing (BPO) and engineering services. But important logic for the deal is that the transaction brings Capgemini IGate's flagship clients, which include General Electric and Royal Bank of Canada.

Twenty-five-year-old IGate has complementary businesses in infrastructure services (3,000 full-time employees), vertical BPO (3,500 FTEs) and engineering services (3,500 FTEs). Intellectual property offerings, such as its integrated database management system in analytics, show growth potential.

The merger broadens Capgemini's industrialized delivery model globally. The company will use IGate's IP to deploy its internal supply chain development.

In 2014, IGate, headquartered in Bridgewater, N.J., reported revenue of $1.3 billion, double-digit growth and a 19 percent operating margin. North America is by far IGate's largest market, representing 79 percent of 2014 revenues, followed by Europe (14 percent) and Asia-Pacific (7 percent).

Capgemini is about nine times as large as IGate in revenue but only four times as large in market value. With the acquisition, North America immediately becomes Capgemeni's largest market.

 

 
 
 
 
Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK. Twitter: @editingwhiz
Join us for our next eWEEKChat May 13: "Software-Defined Data Centers: The Changing Role of IT Hardware."

 
 
 
 
 
 
 
 
 

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