French IT services company Capgemini has announced the acquisition of iGate at $48 per share, valuing it at $4 billion.

Always Seek Knowledge:

1) The iGate acquisition will help the combined entity to compete on par with the other US-based and Indian-based companies.

2) This combined entity will have revenue of 12.5 billion euros in 2015 or ($13.58 billion) and around 190,000 employees.

3) Nearly 48 per cent of the group employees are based in India.

4) Analysts say the acquisition of iGate will help Capgemini compete aggressively with Indian and American IT companies that have significant Indian operations.

5) The iGate delivery footprint may be especially interesting to Capgemini which has been trying to grow its presence in tier II cities in order to reduce labour costs and iGate may be an accelerant to this effort.

6)  iGate enjoys operating margin of 18.7 per cent as opposed to 9.2 per cent for Capgemini.

7) The acquisition of iGate will help the French IT company to increase its share of revenues from North America.

8)  After completion of the iGate acquisition, Capgemini’s North America revenues would go up by a third.

9) In contrast, Capgemini gets around 20 per cent of its revenues from North America.

10) iGate’s footprint in financial services will be a big boost for Capgemini, say analysts.

11) iGate will become a subsidiary of Capgemini North America Inc.

12) The combination of iGate and Capgemini will provide cross-selling revenue synergies of $100-150 million and annual efficiency gains of $75-105 million, the companies said.

13) The transaction is expected to close in the second half of 2015.

14) Capgemini had in 2006 acquired Kanbay International, which had significant operations in India. This helped increase Capgemini’s presence in India.