Capgemini to buy Altran for $4.1b in technology expansion push

Bloomberg

Capgemini SE said it will acquire Altran Technologies SA in a 3.6 billion-euro ($4.1 billion) deal in order to win more tech clients and keep up with rivals.
Paris-based Capgemini is looking to maintain its position as a major IT consultancy in a consolidating industry, as competitors such as Accenture have been building out their sales from digital projects.
Capgemini’s shares rose as much as 8 percent in early morning trading in Paris on Tuesday, the most since October 2011. Altran rose 21 percent to 13.9 euros, trading just below the 14 euros-a-share offer price.
Analysts broadly backed the deal. “We think this deal should bring strong value creation and provides scale that can help Capgemini close the valuation gap to larger rivals such as Accenture,” said Neil Campling, analyst at Mirabaud.
The 14 euros-a-share cash portion of the deal amounts to 3.6 billion euros excluding net debt of 1.4 billion euros, the companies said in a statement. The offer is a 22 percent premium to Altran’s closing price.
The proposal is a “positive step, as it looks to significantly expand into R&D and engineering, two areas becoming
main growth drivers for IT-outsourcing companies,” said Anurag Rana, a Bloomberg Intelligence analyst. “The deal would enable Capgemini to compete more aggressively with Accenture, which generates more than 60 percent of sales from digital projects.”
When combined Capgemini and Altran — also based in Paris — will be able to help clients in areas such as cloud computing, the internet of things, 5G, and artificial intelligence software, Capgemini Chief Executive Officer Paul Hermelin said in a statement.