One of the biggest IT companies Capgemini is expected to acquire the Nasdaq listed Igate according to inside sources.
The deal will be one of the biggest acquisitions in the IT industry. Igate has a revenue of $1.26 billion and a market capitalization of $3.6 billion.
HP’s $13.9 billion acquisition of EDS in 2008 has been one of the biggest so far. More recently, Canada’s CGI acquired UK’s Logica for $2.6 billion.
The speculations of a takeover by Capgemini were in the news when Apex Partners, the company that took Patni Computers takeover by Igate in 2011 converted their debt into equity to become the largest shareholders in the company.
According to the rumors Capgemini is expected to buy 54% stake in the company by acquiring stakes of Apex and Igate founders. The deal is set to go through by the year end.
Genpact and Atos were also keeping tabs on the situation of Igate but it looks like Capgemini has finalized the deal of the takeover.
According to Phil Fersht, CEO of US based HFS Research,
Capgemini has been trying to grow presence in tier II spoke-centres in India to price competitively, but hasn’t gained the level of scale offshore as its primary competition. It has stated that it wants to grow offshore (not just nearshore), so Igate’s footprint will definitely help. Capgemini acquired Kanbay in 2006, which was a successful acquisition and it really got them started in India. So they probably view the Igate acquisition as a similar story,
Igate employs 33,000 people, most of that in India. In January, Over 40% of Capgemini’s global workforce of 1.41 lakh employees is based in India.
With Igate, Capgemini will rival Accenture and IBM in its people strength in India. Accenture and IBM have 1 lakh or more employees here.