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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.
Straightforward integration 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.”
Transaction highlights 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:
ANALYST INVESTOR CALL: 8:00 CET (PARIS)Participant to call the dial-in:Standard International: +44 (0) 1452 589509Toll-free local UK: 0800 694 5723Toll-free local FRANCE: 0805 11 09 81Toll-free local US: 1 866 434 1115Participant Conference ID to be provided: 36490546ReplayDial In Numbers:Standard International: +44 (0) 1452 550000Toll-free local UK: 0800 953 1533Local FRANCE: 0805 11 13 37Local US: 1 866 247 4222 NORTH AMERICA ANALYST INVESTOR CALL 14:00 CET (PARIS)Participant to call the dial-in:Standard International: +44 (0) 1452 589509Toll-free local UK: 0800 694 5723Toll-free local FRANCE: 0805 11 09 81Toll-free local US: 1 866 434 1115Participant Conference ID to be provided: 36538501ReplayDial In Numbers:Standard International: +44 (0) 1452 550000Toll-free local UK: 0800 953 1533Local FRANCE: 0805 11 13 37Local US: 1 866 247 4222
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
With more than 145,000 people in over 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2014 global revenues of EUR 10.573 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.
 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
Rightshore® is a trademark belonging to Capgemini
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