Offers to buy a German company for $1.3 billion continue
BENGALURU: In one of the largest cross-border acquisitions by an Indian IT services company, Persistent Systems has launched an all-cash bid to acquire German company Nagarro for around $1.3 billion, reports Shilpa Phadnis.
This deal could create a $2.9 billion digital engineering and artificial intelligence center with more than 46,000 employees. Persistent offered €81 per share for Nagarro, representing a 140% premium to the stock’s closing price on June 25 and 94% to the 3-month volume-weighted average price. The transaction is expected to close by March 2027, after which the combined entity will operate under the name Persistent-Nagarro Group.
If the acquisition goes through, it will take it more than halfway towards achieving its ambition of becoming a $5 billion company by FY31.The deal will propel Persistent to become India’s seventh-largest IT services company by revenue. The Pune-based company has already agreed to acquire a 21% stake in Nagarro from its largest shareholder, Lantano Beteiligungen, and will later make a voluntary public takeover bid for the remaining shares.
The deal will be executed through a newly established German subsidiary, Galaxy Germany Holding. The acquisition is significant because it will rank among the first large-scale overseas acquisitions in which an Indian IT services company acquires a European counterpart of significant size, reflecting the more common pattern of mergers among European technology companies. Nagaro counts Siemens, Lufthansa, BMW, Maruti Suzuki, Bajaj Finserv, ASA Abloy and New York City among its major clients.
Like the LTIMindtree merger and Coforge’s acquisition of Encora Holdings, Persistent’s bid for Nagarro is driven by three strategic objectives: gaining scale, expanding its European footprint and deepening its digital engineering and artificial intelligence capabilities. “We have always said that we want to be the best technology services company, not a general purpose IT services company. As a group, we aspire to become the second largest B2B player globally and the seventh largest technology services company from the listed landscape in India,” said Sandeep Kalra, CEO, Persistent. The transaction is being financed through a committed bridge financing facility of €1.4 billion from Barclays, backed by a corporate guarantee of up to €1.5 billion from Persistent. Continuing CFO Vineet Tirdesai said the debt would cost the company about 4.1%-4.5% in annual interest. “One is access to capital, which is a little more difficult in Europe. Secondly, we believe the new transformative era of AI will create opportunities beyond digital engineering,” said co-founder Manas Human, explaining why Nagarro chose to sell.