French IT services company Capgemini said on Monday it planned to buy US-based iGATE Corp for $4-billion cash in a deal that will make North America its biggest market.
iGATE, a technology and services company headquartered in New Jersey with 2014 revenues of $1.3 billion, double-digit growth, and a 19 per cent operating margin, is to be acquired for $48 a share, Capgemini said. iGATE’s shares closed on NASDAQ on Friday at $45.85.
The deal will be financed through a combination of Capgemini’s own cash, debt and an equity portion that will not exceed a 6 per cent dilution of the French firm’s share capital.
Capgemini said it had the backing of shareholders representing 54 per cent of iGATE’s share capital for the deal, and that it would enhance earnings immediately.
After completion, North America will represent 30 per cent of the combined 2015 revenue of 12.5 billion euros ($13.58 billion), raising Capgemini’s revenue in the region by about a third.
Paul Hermelin, Chairman and CEO of Capgemini, said that acquiring iGate will help the company attain revenues of €12.5 billion in 2015 with around 190,000 employees. Further, it will help grow revenues at the rate of 12 per cent in 2016 and 16 per cent in 2017 and put the European company in a strong wicket in North America.