Anindita Nayak
Bhubaneswar, 11 June 2024
IT major Cognizant has announced that it would acquire US-based digital engineering firm, Belcan for $1.29 billion (around Rs 10,700 crore) in a cash and stock deal, making it one of the largest acquisitions of the company.
This acquisition will help Cognizant to grow its presence in the aerospace, defense, space, and automotive sectors, mainly in North America and the United Kingdom, the company said in a statement. Belcan is based out of the US and has been supported by the American private equity firm AE Industrial Partners since 2015.
“The revenue of the acquired business is expected to be over $800 million on an annualised basis and has grown at an 8% compound annual growth rate (CAGR) over the last two years,” the company said. “The cash consideration is expected to be funded through a mix of cash on hand and debt,” it added.
The total purchase price of about $1.29 billion includes $1.19 billion in cash and 1.47 million Cognizant shares, valued at $97 million.
In the first quarter of 2024, Cognizant has predicted that acquisitions would boost its annual revenue growth by 100 basis points, aiming for a range between -2% and 2% by year-end. For Q2 FY24, the company forecasted a revenue increase of 0-1.5%, translating into a revenue of $4.75 billion to $4.82 billion.
“We believe that acquiring Belcan will strengthen Cognizant’s position in the sizable and fast-growing ER&D services market. Belcan’s deep engineering capabilities and domain expertise across the aerospace & defence market will be complemented by Cognizant’s scale and own multi-decade digital engineering expertise, providing Belcan’s blue-chip client roster access to our advanced AI, Cloud, and Data technologies,” said Ravi Kumar S, CEO of Cognizant. The transaction is expected to be completed by the quarter ending September 2024.
