French IT services and consulting company Capgemini said Monday it was buying New Jersey-based IGATE for $4 billion, boosting U.S.-generated business to nearly a third of its total activity.
IGATE, an applications, network and business process outsourcing specialist, will help to deepen Capgemini's position in the manufacturing, healthcare and retail markets. One of its major clients is General Electric.
"IGATE is a leading company that perfectly fits our strategic ambition. It will give us a new status on the American market, and take further our industrialisation journey to offer ever more competitive services to our clients," Capgemini president Paul Hermelin said in a statement.
Hermelin said the combined companies would post an estimated $13.6 billion in annual revenues, 30% of which would be generated in North America, which he called the "largest and most innovative market for IT services ... (and) by far the first market of the Group."
In a conference call, Hermelin noted that in considering various acquisition options, Capgemini had "above all looked for a company that would allow us to reinforce geographically in the United States" -- something IGATE does by generating nearly 80% of its annual in revenues in North America.
IGATE sales last year surged 19% to $1.3 billion.
The tie-up will create a combined workforce of 190,000 employees, with around 50,000 servicing US clients and another 27,000 based in India.
The acquisition should be finalised during the second half of the year, and is expected to create annual synergies of $100-150 million, and cost reductions of $75-105 million, Capgemini said.
By Juliette Michel
Copyright Agence France-Presse, 2015