French IT-services major Capgemini on Monday announced the acquisition of US-based IGATE for $4.04 billion in a combination of cash, stock and debt deal. With this acquisition, Capgemini expects to boost its presence in North America, the largest IT-services market in the world.
Sanchit Vir Gogia, chief analyst & group CEO, Greyhound Research, says it’s an expensive buy. “We believe that the acquisition of IGATE by Capgemini is a sweet deal for investors but a surely a deal on the expensive side. While this should ideally help catapult Capgemini’s business in the US, the output will much depend on how Capgemini plans to integrate both the businesses and approach clients for conversations.”
Greyhound Research says IGATE has seen a decline in the margins and its costs have gone up considerably. The company’s revenue increase has been a nominal 10 percent. The company has been on the blocks and has been up for grabs for the past four years. According to them, IGATE’s main strengths have been in the health care, FSI and manufacturing sectors.
“The health care sector in the west presents a lot of opportunities, especially in the UK. Also, with the NHS in UK going the privatisation way soon, we believe this surely puts Capgemini in a very well placed and profitable spot.”
To read the Full Article, click here: Forbes India