North America becomes the largest region of the Group with this major acquisition
Paris and Bridgewater, New Jersey, April 27th 2015 – Capgemini and IGATE today announced that they have entered into a definitive merger agreement under which Capgemini will acquire IGATE for a cash consideration of $48 per share. The transaction will amount to $4.0 billion and is expected to be immediately accretive to Capgemini’s normalized Earnings Per Share (EPS)1. The merger agreement has been approved unanimously by both Capgemini’s and IGATE’s Board of Directors. The transaction has also been approved by the written consent of shareholders holding a majority of IGATE’s shares.
IGATE is a prominent US-listed technology and services company headquartered in New Jersey with 2014 revenues of $1.3 billion, double-digit growth and a 19% operating margin2. North America is IGATE’s largest market representing 79% of revenues in 2014 followed by Europe (14%) and Asia-Pacific (7%). IGATE strengthens Capgemini’s key businesses in application and infrastructure services as well as BPO and engineering services. Moreover, the transaction enriches Capgemini’s portfolio with new flagship clients such as General Electric and Royal Bank of Canada.
This transaction would lead to a group with an estimated combined revenue of €12.5 billion in 2015, an operating margin above 10% and around 190,000 employees. The combined Group will pass the 100,000 employees landmark in its Rightshore® delivery centers in 2015.
This transaction fulfills one of the essential components of Capgemini’s strategy in expanding its presence in the North American market.
Scaling up in North America
Growing its presence in North America, by far the largest and most innovative technology and services market in the world, is at the top of the Group’s strategic agenda. The combination of IGATE and Capgemini increases the Group’s revenues in the region by 33% to an estimated $4 billion, making North America its first market with approximately 30% of the pro-forma combined revenues in 2015. An estimated 50,000 employees will be servicing Capgemini’s North American clients.
Reinforcing sector expertise notably in financial services
With its established position in the financial services sector (42% of revenues), IGATE brings an attractive portfolio of major clients complementary to those of Capgemini. This transaction also reinforces Capgemini’s position in the retail, manufacturing and healthcare sectors, and prompts a faster transition to platform-based solutions.
Enlarging capabilities and offering portfolio
In addition to its experience in applications services, IGATE has complementary capabilities in Infrastructure services (3,000 FTEs), Vertical BPO (3,500 FTEs) and Engineering services (3,500 FTEs). Moreover, its intellectual property offerings such as IDMS in analytics present a high growth and margin potential.
Enhancing the Group’s competitiveness
The transaction broadens Capgemini’s industrialized delivery model globally increasing the Group’s competitiveness in all regions. Capgemini will leverage IGATE know-how to accelerate the “People supply chain” transformation.
Strengthening the economic model
The combination of IGATE and Capgemini provides cross selling revenue synergies of $100-150M and annual efficiency gains estimated at $75-105M to be achieved within 3 years.
Building on both companies previous experiences of integrating acquisitions and a strong cultural fit, the integration is expected to be smooth. The new organization will be in place within 3 months of closing and the integration is expected to be completed within 9 months.
Financially compelling transaction
In addition to attractive synergies and a favorable financing environment, the transaction will accelerate the use of Capgemini’s tax loss carry forward in North America, resulting in an accretion to normalized EPS of at least +12% in 2016 and +16% in 2017.
Paul Hermelin, Chairman and CEO of Capgemini, said: “I am very pleased to announce a very important transaction in Capgemini’s history. IGATE is a leading company that perfectly fits our strategic ambition. It will give us a new status on the American market, and take further our industrialization journey to offer ever more competitive services to our clients. This will also give to the Group’s Indian operations a new scale, allowing us to compete on par with the best US-based and Indian-based companies. I am glad to welcome new talents and leaders to our Group, who share our convictions and professional culture.”
Ashok Trivedi, Co-Founder and Co-Chairman of IGATE said: “We are pleased to have found a great partner for the business and are confident that our employees and customers will benefit from the enhanced service offerings and resources available to them at Capgemini.”
Sunil Wadhwani, Co-Founder and Co-Chairman of IGATE said: “We are gratified that the company we founded over 25 years ago has developed into a global enterprise with over 30,000 employees, a trusted partner to over 250 clients, a market value of over $4 billion, and one of the most respected brands in the IT industry.”
Ashok Vemuri, CEO of IGATE said: “In Capgemini, we have found a partner that will advance our ability to innovate and build industry solutions that will enhance the value proposition we bring to our clients. In addition, this powerful combination will provide exciting opportunities for our employees to expand their capabilities.”
The contemplated transaction will consist in a one-step cash merger between IGATE Corporation and a subsidiary of Capgemini North America Inc. The merger has been approved by the written consent of IGATE Corporation shareholders representing approximately 54% of the capital (subject to a 30-day fiduciary out period during which IGATE Corporation could accept a superior proposal).
The merger is subject to the customary closing conditions, including regulatory approvals. The transaction is expected to close in the second half of 2015.
This transaction will be financed through a combination of:
 Adjusted for the impact of restructuring costs and amortization of intangible assets acquired through business combinations net of tax
 Operating margin excluding share based compensation charge of $17M
IGATE is a global leader in providing integrated technology and operations-based solutions, headquartered in Bridgewater, New Jersey. As a trusted partner to corporations in North America, Europe and Asia Pacific, IGATE provides solutions to clients’ business challenges by leveraging its technology and process capabilities, underwritten by an understanding of domain and industry imperatives. With revenues of US$ 1.3 billion, and a global employee talent capital of over 33,000, IGATE offers productized applications and platforms that provide the necessary competitive and innovation edge to clients across industries, through a combination of speed, agility and imagination. IGATE is listed on NASDAQ under the symbol IGTE.
More information on: www.igate.com
A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of 200,000 team members in over 40 countries. The Group reported 2017 global revenues of EUR 12.8 billion (about $14.4 billion USD at 2017 average rate).
Visit us at www.capgemini.com. People matter, results count.